Benin, South Africa’s Sappi announce euro note offerings; secondary market tightens

By Rebecca Melvin

New York, March 11 – Emerging markets debt saw a pair of new deal announcements on Monday as the new issue market for the Central & Eastern Europe Middle East and Africa region continues to disappoint in general, according to market sources.

The West African country of Benin announced that it is planning to price a benchmark-sized offering of euro-denominated notes of up to an eight-year final maturity. Roadshow meetings are set to begin on Tuesday.

South Africa’s Sappi Papier Holding GmbH announced plans to price €450 million of senior notes due 2026 as part of a refinancing of existing notes.

In addition, Israel’s Formula Systems (1985) Ltd. said that it is considering offering series C debt securities, subject to approvals from regulators and the company’s broad of directors.

The Regulation S offering would be issued under the company’s filed shelf prospectus with the Israeli Securities Authority and the Tel Aviv Stock Exchange.

The deals join a calendar that has been somewhat disappointing so far this year given the lack of significant, benchmark-sized deals.

“There’s been a lot of different small deals,” a London-based trader said.

“It’s been a little bit disappointing so far, but that can all change,” the source said.

The pricing of $12 billion of notes last week for Qatar revealed that amid weak supply, demand for emerging markets debt is strong. “It had a monster deal book,” the trader said regarding Qatar, and noting that, that bodes well for a potential deal for Saudi Arabia’s Aramco that is being talked in the market, although no official mandate has been announced. That deal is likely to be a huge one, the source said.

Meanwhile the secondary market continued to run strong. South Africa spreads were a tighter on Monday and the new Qatar notes were 3 basis points to 4 bps tighter, which helped to support the whole market curve.

There were no new dollar issues announced or priced in Latin America. Work and school activities in Venezuela remained suspended again on Monday as electricity outages affecting 70% of the nation continued, although pockets of the country had been restored to power.

Work and school activities were also canceled on Friday after a massive power outage started on Thursday at about 5 p.m. ET. The Maduro government is calling the outage the result of a sophisticated cyberattack by the United States government, including Secretary of State Mike Pompeo and Florida Senator Marco Rubio, but it has not revealed any evidence that the U.S. government was responsible for the shutdown of the country’s main electricity generator, the Simon Bolivar hydroelectric dam in Bolivar State, known as the Guri Dam.

The Maduro government announced on Saturday that it was ordering a massive distribution of food and drinkable water on Monday as well as efforts to return hospitals to normal functioning. The outage that left Caracas and other major cities in the dark for five days is said to have been responsible for dozens of deaths at hospitals.

Meanwhile, opposition leader Juan Guaido, who is internationally recognized as the interim president of the country, was expected to declare a state of alarm on Monday and on Saturday called for military forces to abandon the Maduro region, tweeting that “electricity will return once the usurpation ends.”

The United States has sanctioned Venezuela so that U.S. persons cannot buy or sell U.S. dollar-denominated debt issued by Venezuelan entities.

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