Ecuador prices notes; Nigeria deal expected in early 2017; ACWA Power postpones offering

By Paul A. Harris

Portland, Ore., Dec. 8 – Emerging markets debt was slightly wider, heading into the New York afternoon, trailing the European Central Bank president Mario Draghi’s Thursday announcement that more money would be pumped into the eurozone economy until the end of 2017, and longer if needed.

Emerging markets debt had a decent tone during the London morning, according to a bond trader based there.

However, the Draghi announcement, in combination with a price drop sustained by 10-year Treasuries (with the yield pushing back toward 2.4%) sparked volatility in the London afternoon.

High beta names were mixed to slightly lower on the day.

The PDVSA 9¾% bond due 2035 was better on the day at 48½ bid, up 0.1%, yielding 20.7%, a source said.

Meanwhile, after spending much of the Thursday session in positive territory, the iShares Trust J.P. Morgan USD Emerging Markets Bond ETF (EMB) closed the New York day down seven cents, or 0.06%, at $109.89 per share.

In the new issue market, Ecuador priced a $750 million deal at the tight end of guidance.

Elsewhere the new issue market was generally quiet, and could remain that way in the run-up to the new year, a trader said.

The window of opportunity for dealers to scare up a crowd will remain open for one or two days in the week ahead, then will close for all practical purposes, the source added.

One factor that is bound to influence the road ahead in emerging markets fixed-rate debt is the perception that globally $2 trillion has migrated to the stock market from the fixed-income market, a trader said.

The numbers bear this out, sources say, adding that a global bond rout has pushed the yield of the 10-year Treasury to 2.4% on Thursday from 1.8% just before the election, a month ago.

Meanwhile the Dow Jones industrial average has soared about 1,200 points since just before the U.S. presidential election on Nov. 7.

Ecuador prices tight

Republic of Ecuador priced a $750 million issue of 10-year senior notes (/B/B) at par to yield 9.65% on Thursday, according to a market source.

The deal came into the market earlier in the day with initial price talk of 10¼%.

Citigroup was the sole bookrunner.

The government’s financing authority plans to use the proceeds in accordance with the public planning and finance code.

Nigeria coming in early 2017

The Federal Republic of Nigeria is expected to show up in the new year with $1 billion of sovereign bonds, a London-based trader said on Thursday.

Although there have been no official announcements, the deal is expected in January.

Citigroup and Standard Chartered are rumored to have the mandate, the source added.

ACWA Power postpones

Saudi Arabia’s ACWA Power Management and Investments One Ltd. postponed its proposed dollar-denominated offering of notes after a week-long roadshow, according to a London-based bond trader.

Investors requested more time to look at the deal, the source added.

Earlier this month Moody’s Investors Service said it assigned provisional long-term Baa3 ratings to fully amortizing senior secured bonds due 2039, with a stable outlook.

S&P assigned a preliminary BBB-, also with a stable outlook.

ACWA Power is a Riyadh-based company that provides electricity and desalination services.

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