El Salvador hits bond market under new leadership
Sovereign returns to dollar market with 30-year
With a new president at the helm, EL
SALVADOR returned to the dollar market for
THEûlRSTûTIMEûINûOVERûTWOûYEARSûLASTûWEEKû
WITHûAû
YEARûBOND
4HEûSOVEREIGN ûRATEDû""
"
ûRAISEDûABOUTû
53BNûAHEADûOFûAû53MûBONDû
AMORTIZATIONûINû$ECEMBERûANDûFOLLOWINGûTHEû
ELECTORALûVICTORYûOFû.AYIBû"UKELEûINû&EBRUARY
-ARKETSûWEREûLOOKINGûSOFTERûONû4UESDAYûASû
US President Donald Trump’s comments on
53
#HINAûTRADEûTALKSûUNNERVEDûINVESTORS ûBUTû
NOTûENOUGHûTOûPUTûOFFû%Lû3ALVADOR ûWHICHûHADû
JUSTûlNISHEDûINVESTORûMEETINGS
h)TûISûNOTûAûGREATûDAYûCONSIDERINGûTHEû
4RUMPûRISK ûBUTûTHISûDEALûHASûBEENûINûTHEû
WORKSûFORûAûWHILE vûSAIDû3IOBHANû-ORDEN û
HEADûOFû,ATINû!MERICAûlXED
INCOMEûSTRATEGYû
ATû!MHERSTû0IERPONTû3ECURITIES
h7EûHAVEûAûLITTLEûBITûOFûINSTABILITY ûBUTûITû
DOESNTûTAKEûAWAYûTHEûAPPEAL ûOFûANû
INFREQUENTûHIGH
YIELDûISSUERv
Leads Citigroup and ScotiabankûTIGHTENEDû
GUIDANCEûTOûû
BP ûINSIDEû
INITIALûPRICEûTHOUGHTSûOFûûAREA ûBEFOREû
PRICINGûTHEûDEALûATûPARûTOûYIELDû
4HATûWASûABOUTûBPûOVERûTHEûLONGESTû
POINTûONûITSûCURVE ûTHEûS ûWHICHûHADû
BEENûBIDûATûAROUNDû
4HEûDEALûCAMEûAFTERûSOMEûSUBSTANTIALû
CURVEûSTEEPENINGûTHISûYEARûAMIDûLOWERû
DEMANDûAMONGûLOCALSûFORûLONGER
DURATIONû
DEBTûASûCONCERNSûOVERûRElNANCINGûRISKSûANDû
POLITICALûUNCERTAINTYûPLAYEDûOUT
%VENûSO ûWITHûMARKETSûANTICIPATINGûAûMOREû
ACCOMMODATIVEû&EDERALû2ESERVE ûWHICHûCUTû
RATESûONû7EDNESDAYûFORûTHEûlRSTûTIMEûINûOVERû
AûDECADE û%-ûCREDITSûHADûBEENûCATCHINGûAûBIDû
ASûINVESTORSûGOûONûTHEûHUNTûFORûYIELD
h7EûEXPECTûTHEûNORMALIZATIONûOFûTHEûCURVEû
TOûBEûLARGELYûDRIVENûBYûFURTHERûTIGHTENINGûOFû
THEûLONGûENDûASû%-ûBENElTSûFROMûTHEûEASINGû
CYCLE vûWROTEû4HOMASû*ACKSON ûANû%-û
SOVEREIGNûANALYSTûATû/PPENHEIMER
h!SûSUCH ûWEûVIEWûTHISûNEWûISSUANCEûOFûAû
LONGERûMATURITYûASûPARTICULARLYûATTRACTIVEû
WITHûSPACEûTOûTIGHTENûGIVENûTHEûEXPECTATIONû
OFûAûLOWûûTOûûPRICINGv
4HEûDEALûALSOûLOOKEDûCHEAPûAGAINSTû#OSTAû2ICA ûWHICHûWASûSEENûASûAûDETERIORATINGû
CREDITûSTORY ûBUTûHADûSûBIDûATû
%Lû3ALVADORSûNEWûGOVERNMENTûWASûSEENûINû
AûPOSITIVEûLIGHTûAMIDûHOPESûTHATûITûWOULDû
INSTILûCONSERVATIVEûlSCALûPOLICIESûANDû
IMPROVEûRELATIONSûWITHûTHEû53
h4HISûISûRATIONALûASûûOFûITSûTRADEûISûWITHû
THEû53 vûSAIDû-ORDEN
"UKELESûWINûUNDERûTHEû'!.!ûPARTYûMARKSû
AûBREAKûFROMûTHEûCOUNTRYSûPOLITICALûPASTûTHATû
WASûDOMINATEDûBYûTHEûRIGHTûWINGû!2%.!û
PARTYûANDûTHEûLEFTISTû&-,.
.EAR
TERMûlNANCINGûRISKSûHAVEûBEENû
contained with this deal and some
MULTILATERALûLOANS ûANDûTHEû"UKELEû
ADMINISTRATIONûHASûPUTûPENSIONûREFORMûBACKû
ONûTHEûTABLE ûACCORDINGûTOû&ITCH
4HEûCOUNTRYSûDEBT
TO
'$0ûRATIOûROSEûTOûCLOSEûTOû
ûINûûFROMûûINû ûLARGELYûBECAUSEûOFû
PENSIONûLIABILITIES ûTHEûRATINGûAGENCYûSAID
h4HEûDEBTûDYNAMICSûNEEDûTOûIMPROVEûINû
THEûMEDIUMûTERMS ûBUTûTHEYûAREûNOTûFACINGû
ANYûIMMEDIATEûFUNDINGûCRISES vûSAIDû-ORDEN
Paul Kilby FRONT STORY MIDDLE EAST
GEMS eschews euros for dollars
Education provider sidelines euro tranche and ups dollar bonds
GEMS EDUCATIONûSHIEDûAWAYûFROMûEUROSûANDû
concentrated all its efforts on US dollars as it
RAISEDû53MûTHROUGHûAûSEVEN
YEARûNON
CALLûTHREEûBONDûONû4UESDAY
4HEû5!%ûEDUCATIONûSERVICESûPROVIDERûHADû
ORIGINALLYûTARGETEDûAûGLOBALûCREDITûAUDIENCEû
WITHûANû53MûOFFERINGûCOMPRISINGûAû
53MûTRANCHEûANDûAû53M
EQUIVALENTû
BONDûINûEUROSû"OTHûHADûTHEûSAMEûTENORû
STRUCTURE
0RICEûTALKûONûTHEûTWOûNOTESûWASûûAREAû
ANDûûAREAûRESPECTIVELYû"UTûTHEûISSUERûTHENû
DROPPEDûTHEûEUROûTRANCHE ûGOINGûFORûAûBIGGERû
DOLLARûNOTEûINûTHEûPROCESSû4HATûBONDûPRICEDû
ATûAûYIELDûOFû
h4HEûEUROûDEALûWASûONûTHEûTABLE ûBUTûTHEYû
ULTIMATELYûNEEDûDOLLARS vûSAIDûAûLEADûh)TûDIDû
NOTûREmECTûTHATûTHEûEUROûDEALûWASNTû
WORKING ûITûWASûJUSTûTHATûITûWASûMOREû
COMPELLINGûTOûDOûAûLARGERûDOLLARûDEALv
The lead said that some euro accounts
HADûROLLEDûINTOûTHEûDOLLARûTRADE
!TûTHEûSAMEûTIME ûTHEûCOMPANYûDECREASEDû
THEûSIZEûOFûAûSEVEN
YEARûTERMûLOANû"ûBYû
53MûTOû53Mû4HEûSEVEN
YEARû4,"û
WASûOFFEREDûATûBPûOVERû,IBOR
4HEûSTARTINGûPOINTûFORûDETERMININGû
RELATIVEûVALUEûFORûTHEûBONDûCAMEûFROMûTHEû
LOANûMARKET ûTHROUGHûNAMESûLIKEû.ORDû
!NGLIAû%DUCATIONûANDû#OGNITAû3CHOOLS
h7EûDIDûLOOKûATû;THEûBOND=ûANDûFELTûTHATûINû
THEûLOWûSûWEûWEREûNOTûGETTINGûFAIRLYû
compensated for risks associated with the
COMPANY vûSAIDû!BDULû+ADIRû(USSAIN ûHEADû
OFûlXEDûINCOMEûASSETûMANAGEMENTûATû
!RQAAMû#APITAL
(USSAINûCITEDûTHEûCOMPANYSûLEVERAGEûASû
ONEûNEGATIVEûFACTOR ûSOMETHINGûTHATû&ITCHû
ALSOûHIGHLIGHTEDû4HEûRATINGûAGENCYûNOTEDû
THATûTHEûGROUPSûLEVERAGEûWILLûINCREASEûAFTERû
THEûPLANNEDûlNANCING
(OWEVER û&ITCHûANALYSTSûADDEDûTHATû
WITHOUTûDIVIDENDS ûTHEREûISûCAPACITYûTOû
DELEVERAGE ûASûINHERENTûMAINTENANCEûCAPEXû
ISûLOWûANDûSPENDINGûONûEXPANSIONûPLANSûINû
$UBAIûISûTOûBEûLOWERûTHANûBEFORE)NDEED ûALTHOUGHû'%-3ûISûRATEDû""" û
THEûNOTESûAREûEXPECTEDûTOûBEûRATEDûONEûNOTCHû
HIGHERûBYû&ITCH ûATû"
(USSAINûSAIDû'%-3ûBENElTSûFROMûBEINGûINû
AûMARKET
LEADINGûPOSITIONûINûTHEû5!%ûWHILEû
OPERATINGûINûAûDEFENSIVEûINDUSTRYû(EûSAIDû
ANOTHERûPOSITIVEûWASûITSûPARTIALûOWNERSHIPû
BYûPRIVATEûEQUITYûlRMû#6#û#APITALû0ARTNERS
!ûCONSORTIUMûLEDûBYû#6#ûHASûAGREEDûTOû
ACQUIREûAûûSTAKEûFROMû'%-3û
SHAREHOLDERSû!ûCONSORTIUMûLEDûBYû&AJRû
#APITALûINCLUDINGû4ACTICALû/PPORTUNITIESû
FUNDSûMANAGEDûBYû"LACKSTONEû'ROUPûANDû
"AHRAINSû-UMTALAKATû(OLDINGûWILLûEXIT
'%-3ûWASûRElNANCINGû53BN
EQUIVALENTûOFûDEBTûFOLLOWINGûTHEûMINORITYû
INVESTMENTûBYû#6#
Goldman SachsûWASûSOLEûPHYSICALû
BOOKRUNNERûANDûGLOBALûCOORDINATOR ûANDû
Credit SuisseûWASûGLOBALûCOORDINATORûANDûJOINTû
BOOKRUNNERû4HEYûWEREûJOINEDûONûTHEûBOOKSû
BYûCitigroup, Emirates NBD Capital and HSBC
Robert HoggEMERGING MARKETS
China India Indonesia South Korea Mozambique Israel Lebanon Argentina