Mixed reception for EM sovereign bonds

viernes 15 de enero de 2016 13:06 GYT

* Poland and Slovakia struggle in euros

* Chile and Mexico reopen dollars

* Onus on appropriate pricing strategies

By Sudip Roy and Paul Kilby

LONDON, Jan 15 (IFR) - A host of heavyweight EM sovereigns finally came to market this week, although fortunes were mixed as doubts about China's economic outlook and further jitters in commodity markets continue to haunt the asset class.

Poland (A2/A-/A-), Chile (Aa3/AA-/A+), Mexico (A3/BBB+/BBB+) and Slovakia (A2/A+/A+) all issued bonds, though the two European sovereigns, which both raised euros, struggled in terms of pricing and performance.

Chile also made a rare foray into the euro market as part of a dual-currency offering that included US dollars - the first from an EM sovereign in that market this year. That bond was linked to a tender. Mexico tapped dollars too as investors finally got to put their growing cash piles to work.

That the asset class's marquee names are hitting screens - Israel too was meeting investors this week ahead of a dollar deal - will be of enormous relief to syndicates. But in this market no trade is a simple execution, as Poland and Slovakia showed.

The former issued 10-year and 20-year bonds, raising 1.75bn in the process. But the leads were unable to move pricing on the 10-year notes from initial levels of 65bp area over mid-swaps, while on the 20-year it was only tightened by 5bp from an initial plus 105bp area.   Continuación...