UPDATE 2-Trinidad taps demand for EM credits with rare bond sale

jueves 28 de julio de 2016 13:05 GYT

(Changes throughout)

By Paul Kilby

NEW YORK, July 28 (IFR) - Trinidad & Tobago launched a US$1bn 10-year bond on Thursday, marking its first international deal in over two years as it struggles to close a fiscal gap caused by weaker crude prices.

With order books swelling to around US$3bn by late morning, the Caribbean nation was set to comfortably raise US$1bn despite concerns about the oil exporter's deteriorating credit quality.

While broader markets were softer on Thursday as oil prices continued to decline, investors took a shine to a rare deal from Trinidad amid a positive backdrop for EM debt following several weeks of record inflows.

Initial price thoughts of high 4% caught the eyes of more than enough investors, even amid expectations that the deal would land at 4.5% after leads released guidance at 4.625% (+/-1/8).

"4.5% is fair," said Sean Newman, senior portfolio manager at Invesco, who has been comparing Trinidad's deal against double and triple B credits under ratings pressure.

This includes Oman (Baa1/BBB-) and Turkey (Baa3/BB/BBB-) which have 10-year bonds trading around or slightly above 4.5% in the secondary markets.

At that level, the sovereign provides a decent pick-up to its curve, where the more liquid 2024s were trading at around 3.60% on Wednesday.   Continuación...