EM debt improves slightly; DP World brings more than $3.3 billion bonds in four tranches

By Rebecca Melvin

New York, Sept. 19 – Emerging market debt was marginally better on Wednesday with names like Petroleos Mexicanos SAB de CV seeing slight gains amid gains in both U.S. stocks and Treasury yields.

Pemex’s 6¾% notes due 2047 were last 93 on Wednesday compared to 92.85 late Tuesday. That puts it in the middle of its recent range. In June, the Pemex 6¾% notes notched a low mark of 89.

In the primary market, there was about $3.3 billion equivalent of new bonds for the Middle East and Africa region. Dubai’s DP World Ltd. priced the new paper in four tranches of bonds in multiple currencies on Tuesday. But the amount of new issuance remains below expectations, according to a market source.

DP World priced a $1 billion 10-year sukuk, or Islamic bond, at par with a coupon of 4.848%, or a spread of mid-swaps plus 175 basis points. That was tight compared to price guidance provided during bookbuilding for a yield of mid-swaps plus 185 bps.

Order books were in excess of $2 billion for the sukuk.

There was also $1 billion of 5 5/8% 30-year notes that priced at 98.928 for a yield of 5.7%. That compared to price guidance for a yield of 5.75% to 5.8%.

A €750 million tranche of 2 3/8% eight-year notes priced at 99.089 to yield 2.502%, or a yield spread of mid-swaps plus 170 bps, and a £350 million tranche of 4½% 12-year notes priced at 98.897 for a yield spread of Gilts plus 270 bps, which compared to guidance of Gilts of 270 bps to 280 bps.

The global port operator also tendered for $413.46 million of a $650 million existing sukuk trust certificate due 2019.

The new paper joined some further issuance for the Gulf Council Cooperation countries. This week the GCC region has seen the National Bank of Oman price $500 million of notes and the Islamic Development Bank price. But neither the United Arab Emirates’ Aldar Properties PJSC nor Saudi Electricity Co. have yet launched expected sukuk. Aldar is an Abu Dhabi-based real estate company, and Saudi Electric is a state-owned electricity company.

In the broader markets, the S&P 500 and the Dow Jones industrial average in the United States rose on Wednesday, with the Dow hitting its highest level since January. U.S. Treasury yields were also high as trade worries waned.

There is a growing perception that the trade war between the United States and China will be a slow moving affair that may be years in the making that will not cause sudden market gyrations as much as longer-term shifts in strategy.

U.S. President Donald Trump has nominated former Federal Reserve economist Nellie Liang to the U.S. central bank’s board of governors. Liang established the Fed’s Division of Financial Stability in 2010.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.