Topaz Marine prices notes; Ghana recoups some ground; Venezuela slips as sanctions weighed

By Rebecca Melvin

New York, July 19 – New deals continued to trickle through in emerging markets on Wednesday, with Topaz Marine SA pricing $375 million of five-year notes to yield 9 1/8%, which was the tight end of talk for the Rule 144A and Regulation S notes.

Local-currency deals completed included India’s vehicle financing company Shriram Transport Finance Co. Ltd.’s Rs. 2.3 billion of 7.8% three-year secured redeemable non-convertible debentures.

Details emerged on planned deals including Creditvalores-Crediservicios SAS’s up to $300 million of five-year notes that were being talked to yield in the mid-to-high 9% range and Israel-based Partner Communications Co. Ltd.’s up to NIS 300 million of seven-year debentures, which were talked to price with yield of up to 2.16%.

Proceeds from the Regulation S Partners paper will be used to increase the company’s liquidity so that it can meet scheduled debt repayments.

Back in established issues, Ghana recovered from a selloff on Tuesday with the sovereign’s bonds tightening back in by as much as 15 basis points.

There was uncertainty regarding whether Ghana will ask the International Monetary Fund for an eight-month extension of its credit facility or complete the program as scheduled in April and issue new notes.

Ghana’s Finance Minister Otori-Atta walked back comments by the country’s president that meeting the initial schedule should not be interpreted as meaning that the government is pulling out of the IMF program.

“At this point, it still remains unclear wither Ofori-Atta’s comments imply an extension or not, but markets have somewhat eased,” MUFG Securities’ analyst Trieu Pham wrote in a comment published early Wednesday.

Ghana’s meeting with the IMF board has been postponed until the end of August from the end of July as progress on the program has taken longer than expected. The sovereign is also prepping a domestic currency bond deal to help pay energy industry debt, Pham wrote.

The IMF had previously discouraged the issuance of new debt, Pham noted.

Ghana notes recover

The spread on Ghana’s 9¼% notes due 2022 came in 15 bps compared to Tuesday. The price of that bond was indicated at 108¼ bid, 109 offered.

Ghana’s 7 7/8% notes due 2023 came in nearly 14 bps and was indicated at 102¼ bid, 103 offered, and Ghana’s 8 1/8% notes due 2026 were indicated at 102¼ bid, 103¼ offered, tightening by 10 bps.

Ghana’s shortest dated maturity – due later this year – and the longest-dated notes due 2030 saw the least amount of spread contraction. The 2017 notes with a coupon of 8½% were indicated at 100¾ bid, 101¼ offered, according to a market source.

Elsewhere, Venezuela and Petroleos de Venezuela SA saw their debt drop between ½ to 1½ points on Wednesday, with the shortest-dated maturities suffering the biggest hits, a Connecticut-based trader said.

The PDVSA notes due 2017 were quoted at 83¼ bid, 84½ offered.

The end game in Venezuela debt continued to be debated with a showdown between the dictatorial regime of President Nicolas Maduro and the United States regarding what form proposed U.S. sanctions against the country might take if Maduro proceeds with his plan to elect a constituent assembly and radically rewrite the national constitution to extend his grip of power over the nation.

Luis Almagro, secretary general of the Organization of American States, told U.S. senators at a hearing on Wednesday, that sanctions are advisable if they do not harm the Venezuelan people, and he did not think they could hurt the people more than they have already been hurt under the regime.

There are others who argue that imposing sanctions would play into Maduro’s hand because he could blame the United States and outsiders for the economic and social duress that the country experiences.

Speaking to the Senate Committee on Foreign Relations, Almagro said that the rule of law has collapsed in Venezuela and that it is imperative the United States and international community do what they can to restore democracy.

According to statistics cited during the hearing, Venezuela’s current international reserves total $10 billion, and that is $7 billion short of the $17 billion needed for the remainder of this year to service debt.

Market complacency feared

A trader said he was concerned about complacency in the financial markets as many market players seen to believe that regime change is imminent. But the trader is not so sure. “Maduro could hold on to the end,” the trader said, explaining that the Maduro government has shown a lack of any sensibility or responsibility for the welfare of the people.

The trader’s comments echoed those of Almagro made later in the day.

“The regime has consistently rejected any and all offers of international humanitarian assistance. Instead they have weaponized what little resources they do have, selecting who gets what,” Almagro said.

He added that the government has blood on its hands and must be held accountable. “I will be relentless and continue to denounce the dismantling of democracy and the constitution, the violations of human rights, and the violent repression taking place,” he said.

While Almagro said that sanctions should not be set that will worsen the suffering of the people, they can work if they have the backing of the people internally, and Sunday’s unofficial referendum in which 7.6 million Venezuelans voted against the regime shows that the will of the people to restore their democratic freedoms is strong.

The people are demanding that political prisoners be freed, that elections, including presidential elections, be scheduled and that the power of the Venezuela National Assembly be re-established. But to date, there has been no movement of the government toward those ends.

© 2015 Prospect News.
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