Emerging-market borrowers raised at least $13 billion since July 10, when comments from Federal Reserve Chairman Ben S. Bernanke tempered speculation the U.S. would scale back stimulus. Yields had soared to 5.54 percent June 24, the highest since 2011, as Bernanke signaled he may reduce bond purchases that had fueled gains in developing-nation assets. Yields were at 4.78 percent yesterday, the Bloomberg USD Emerging Market Sovereign Bond Index showed.
“Investors are happy that the rate environment has calmed down a lot,” providing an opportunity for issuers, Spencer Maclean, the head of syndicate for western European debt capital markets at Standard Chartered Bank in London, said by phone yesterday. “September and October are going to be busy, so if you can beat the rush now you ought.”
Bond sales are gathering momentum again after emerging-market countries and companies raised a record $657 billion in the first half of this year, up from $559 billion in the same period of 2012, data compiled by Bloomberg show. Bahrain waited to sell after concluding its bond road show June 18, issuing 10-year bonds at a yield of 6.20 percent, down from about 6.50 percent that was initially proposed, said a person with knowledge of the deal, who asked not to be identified because the information is private.
Bahrain sold 10-year bonds last year at 6.14 percent. Yields on those securities rose 29 basis points, or 0.29 percentage point, to 5.89 percent yesterday. The offering was the first from the six-nation Gulf Cooperation Council since Dubai borrowed in January.
“Issuers such as Bahrain met everyone last month in hope the pre-August window would open,” Richard Segal, the head of international credit strategy at Jefferies Group Inc. in London, said by e-mail. “Bernanke has more recently calmed bond market sentiment and this provided issuers and investors with more confidence that yield levels will stabilize.”
Moody’s Investors Service placed Bahrain’s debt on review for a possible downgrade last month due in part to the “high and rising” oil price needed to balance its budget. The kingdom of Bahrain is rated Baa1 at Moody’s, the third-lowest investment grade, and BBB at Standard & Poor’s, the second-lowest. The rankings put it on a par with Mexico, Russia and South Africa.
Bahrain’s fiscal deficit will widen to between 4 percent and 5 percent of gross domestic product this year from 2.6 percent last year, Moody’s said in June, citing data from the International Monetary Fund.
Indonesia sold $1 billion of 10-year bonds on July 10 to yield 5.45 percent, the highest rate for a 10-year note from the country since it paid 6 percent in January 2010, data compiled by Bloomberg Show. Pemex issued $3 billion the following day. Naspers Ltd. (NPN), Africa’s largest media company, raised $750 million on July 11 and a further $250 million July 16.
Africa’s largest power producer, Eskom Holdings SOC Ltd., is holding investor meetings in the U.K. and U.S. this week as it needs to fill a $25 billion funding gap, Hilary Joffe, a spokeswoman for the state-owned company, said in an e-mailed response to questions July 22.
Ghana is also holding a road show this week for its second Eurobond sale, aiming to raise $1 billion, according to Adams Nyinaku, the head of treasury at the Accra-based Bank of Ghana. Ghana is seeking a yield around 8.125 percent on a 10-year bond, according to three people with knowledge of the offering who asked not to be identified because information is private.
First Bank of Nigeria hired Citigroup Inc. and Goldman Sachs Group Inc. for dollar bond investor meetings, according to a person with knowledge of the offering who asked not to be indentifed.
Yields on 10-year U.S. Treasuries have fallen to 2.60 percent from a July 5 close of 2.74 percent that was the highest in two years. That compares with this year’s low of 1.63 percent on May 2.
“At the end of June no investors were prepared to stick their necks out,” Doug Bitcon, a fund manager at Rasmala Investment Bank Ltd. in Dubai which manages more than $1 billion in emerging and frontier market assets, said by phone. “There’s been a period of stability, maybe seven days when the 10-year Treasuries have been range bound. On the back of that investors have come back into the market.”
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