EM debt little changed in quiet trade; DP World preps deals; market eyes Papua New Guinea

By Rebecca Melvin

New York, Sept. 10 – Emerging markets debt was quiet to start the new week on Monday, with spreads mostly narrowly mixed while the U.S. dollar was little changed and U.S. Treasuries were stronger, according to market sources.

In the new issue market, DP World Ltd. and DP World Crescent Ltd. announced plans to issue a new 10-year sukuk as well as a 30-year benchmark of dollar bonds.

“DP World mandate about the highlight” of the session, a London-based trader said.

Fixed-income investor meetings for the Dubai-based container terminal operator’s new paper are set to begin on Wednesday. The company is also tendering for a 2019 sukuk.

National Bank of Oman SAOG, which was already on the calendar for a new deal, announced Monday a tender for up to $300 million of its $600 million 3 1/8% notes due 2019 using proceeds of the new deal.

Meanwhile, the planned Papua New Guinea U.S. dollar-denominated benchmark offering of senior unsecured notes (expected rating: B2/B) was being watched as a barometer of the emerging markets debt markets if successfully priced.

The Rule 144A and Regulation S Papua New Guinea notes were expected to have a tenor of five to 10 years and were being sold via Citigroup and Credit Suisse as bookrunners.

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

S&P’s said that its rating reflects structural constraints inherent in a lower-middle-income economy dependent on extractive industries and served by weak institutions, restricted monetary policy flexibility and increased government debt.

Another deal in focus was the planned Suzano Papel e Celulose SA U.S. dollar-denominated benchmark offering of senior unsecured notes.

The Brazilian pulp and paper company delayed pricing anticipated last week in order to monitor markets, and the situation was unchanged on Monday as the company was still seen to be able to watch for better market conditions, a New York-based market source said.

BNP Paribas, JPMorgan, Mizuho, Rabobank and others were selected to arrange roadshow meetings that were held in the United Kingdom and the United States for Suzano. The issuing entity will be Suzano Austria GmbH, which is guaranteed by Suzano.

The broader markets were mostly balanced as market players continue to worry about and watch developments in U.S. President Donald Trump’s trade policies. There was still no word on an agreement between the United States and Canada on a trade agreement that would complete a renegotiated North American Free Trade Agreement. The United States has reached an agreement with Mexico only.

There are also escalating conflicts with China and the European Union.

Trump said he is now considering whether to impose tariffs on an additional $400 billion or more in Chinese goods, which could give investors pause.

© 2015 Prospect News.
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