Colombia to Armenia to Turkey Greet Emerging Rally on Fed
Armenia prepared its first international bond sale as emerging-market issuers from Turkey to Colombia took advantage of plunging yields triggered by the Federal Reserve’s surprise move to keep its stimulus intact.
Armenia will issue dollar bonds today, said a person with knowledge of the plan, asking not to be identified because the information is private. Turkey will meet investors next week for a sale of Shariah-compliant debt, according to the Treasury. Colombia said it’s selling 10-year dollar notes, while Brazilian and Mexican state-owned companies BNDES and Petroleos Mexicanos are also marketing debt.
Investor relief at the Fed’s decision sent the extra yield on emerging-market bonds over Treasuries tumbling 14 basis points to 320 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index. Rising yields in the run-up to the Fed meeting had caused emerging-market governments and companies to cut issuance to the lowest since 2011 this quarter, data compiled by Bloomberg show.
“This is a fantastic opportunity for issuers to get business done while borrowing is still cheap,” Tim Ash, chief emerging-market economist at Standard Bank Group Ltd. in London, said by e-mail. “It will get much more expensive next year.”
Armenia is offering seven-year bonds at a yield of 6.25 percent, according to the person familiar. The yield on notes due 2021 with the same Fitch Ratings grade of BB- from neighboring Georgia dropped 21 basis points in the past two days to a one-month low of 5.77 percent.
The Fed’s decision yesterday surprised economists surveyed by Bloomberg, whose median estimate was for a $5 billion reduction in the central bank’s monthly bond purchases.
Turkish officials will travel from Doha to Kuala Lumpur next week to drum up support for a sukuk sale, the person with knowledge of their plans said. The yield on the nation’s sukuk due 2018 plunged 36 basis points, or 0.36 percentage point, today to 4.06 percent, the biggest decline since June 25.
Colombian Finance Minister Mauricio Cardenas said in a Caracol Radio interview that the South American nation will raise $1 billion to take advantage of the window created by the Fed’s decision not to curb asset purchases.
There will be “roadshows galore” for the rest of this year as more governments, including Hungary and Ukraine, are set to tap the capital markets, Ash said.
The Hungarian Development Bank plans a bond sale in the near future, Janos Nyiri, a spokesman for the state-owned lender, said by phone today. Hungary’s government may raise ‘slightly’ more than $1 billion in foreign-currency bonds as soon as October, Istvan Torocskei, chief executive of the debt agency AKK, said in an e-mailed response to questions from Bloomberg today.
Eurasian Development Bank, the Kazakhstan-based lender created to promote economic ties between member nations from Russia to Tajikistan, is offering $500 million of bonds due in 2020, a person with knowledge of the deal said.
Saudi Basic Industries Corp. (SABIC) hired banks for what would be the petrochemicals maker’s first dollar bond since 2010, while the Abu Dhabi government-owned Al Hilal Bank PJSC will meet prospective bondholders from Sept. 22, people familiar said.
Brazilian state development bank BNDES plans to sell three-and 10-year bonds as soon as today, according to a person familiar with the offering. State-owned Petroleos Mexicanos is planning a sale of Mexican peso denominated bonds locally and abroad, another person familiar with the transaction said.
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