EM debt closes September on steadier footing; Papua New Guinea prices 10-year note

By Rebecca Melvin

New York, Sept. 28 – Emerging-markets debt was little changed on Friday as the books closed on September, which brought improved stability to much of emerging markets debt and emerging markets currencies compared to the volatile summer months, market players said.

It was “better than August!” a London-based trader said of the past month.

The Turkish lira is up 10% for September and traded below 6 lira to the U.S. dollar on Friday before settling back at 6.01 lira to the dollar. That is much improved from 6.47 to the dollar on Sept. 10 and 6.74 to the dollar on Aug. 30.

In addition to improvement in Turkey bonds for September, Argentina strengthened and the Middle East and Africa firmed especially the Gulf Arab states.

Papua New Guinea priced $500 million of 10-year notes (B2/B) at par late Thursday to yield 8 3/8%, which priced tight to initial talk in the 9% area. That deal was one of a handful of new issues priced in the past week.

Also from Asia, pricing was heard on a pair of local-currency bonds. China Suntien Green Energy Corp. Ltd. priced RMB 500 million of 5.69% three-year notes on Thursday. The Shijiazhuang, Hebei, China-based wind power and natural gas company will use proceeds mainly to repay bank borrowings and to optimize the company’s financial structure. And Shanghai-based real estate developer and property manager Zhenro Properties Group Ltd. issued RMB 2 billion of 7½% three-year corporate bonds,

Other deals that priced this week included a $500 million seven-year sukuk for UAE’s Aldar Investment Properties LLC and the Republic of Hungary’s €1 billion 1¼% seven-year notes.

The last week of September was slower than the previous week in terms of new deals but was still indicative of an open window for the emerging markets debt primary, according to a market source.

The previous week starting Sept. 17 was notably more active with many $1 billion-plus deals pricing including those for Brazil’s Suzano Papel e Celulose SA, Banco Santander (Mexico), Saudi Electricity Co., Dubai’s DP World Ltd., South Africa’s Sasol Ltd. and Islamic Development Bank.

On tap for next week are deals for Saudi Basic Industries Corp., Gulf International Bank BSC and Al Khalij Commercial Bank for the Middle East and Africa and also Albania for the Central & Emerging Europe and possibly Banco Atlantida SA for Latin America.

Papua New Guinea prices

The Asian sovereign priced 10-year senior unsecured notes, which was the long end of a range of five- to 10-years that were talked when the deal was announced on Sept. 4. The deal priced with an 8 3/8% coupon, which was tight to initial price talk in the 9% area.

Citigroup and Credit Suisse were the bookrunners for the Rule 144A and Regulation S notes.

Proceeds will be used primarily to refinance existing short-term domestic debt, to finance government spending on infrastructure and development projects and for operational expenses for the Asia-Pacific Economic Cooperation Summit to be hosted by Papua New Guinea in November.

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