StanChart Sells First Bangladesh-Tied Notes Amid Hunt for YieldJun Yang
Standard Chartered Plc sold the first-ever structured notes tied to Bangladesh’s sovereign debt, as offerings of securities linked to high-yielding emerging-market debt surge.
The lender sold a combined $12.6 million of four-year notes tied to the nation in four offerings on May 30 and June 3, according to data compiled by Bloomberg. The underlying debt, which had never been used for credit-linked notes, has coupon rates of 11.25 percent to 11.5 percent, the data show.
Investors hunting for high yields have turned to securities offering access to emerging-market debt this year amid global monetary easing. That has led to the first sales of notes tied to nations from Bahamas to Lithuania to Honduras, while issuance connected to such countries as Vietnam and Sri Lanka has surged to records, according to Bloomberg data.
Valerie Tay, a Singapore-based spokeswoman for Standard Chartered, declined to comment on the notes.
Standard & Poor’s last month kept its rating on Bangladesh’s sovereign debt at BB-, three levels below investment grade, citing a low level of economic development and limited flexibility in fiscal and monetary policy. The shortfalls are offset by the prospect of economic growth, the credit agency said in a statement, maintaining a stable outlook for the country.
Bangladesh’s economic expansion will accelerate to 7.2 percent in the 12 months through June 2014, the country’s finance minister said in a May 31 interview.
Sales of notes tied to Vietnam surged more than 12-fold to $188.9 million through May this year from all of 2012, a record volume for any full-year period, according to Bloomberg data. Issuance linked to Sri Lanka also soared to a record $198 million during the period, the data show.
Credit-linked notes pay investors higher coupons than the underlying bonds and offer tailored maturities in exchange for taking default risks of the debt.