Morning Commentary: Benin announces euro notes offering; 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.

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 to 4 basis points tighter, which helped to support the whole market curve.

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