Guatemala stuffs order books in bond return
April 22, 2020 |
Sovereign issuer receives more than $8 bln in orders in a two-part deal that raises $1.2 bln for COVID-19 response
Guatemala received more than $8.1 billion in orders in a two-part bond sale on Tuesday that raised $1.2 billion for the country's response to COVID-19, according to sources close to the deal.
"Guatemala has maintained the best technicals in Central America and the Caribbean by far during this entire crisis," said an analyst in New York.
Or as an investor in the Caribbean put it, "One of the things that makes Guatemala attractive is its low level of indebtedness."
Guatemala sold $500 million worth of 2032 social bonds and reopened its 6.125% 2050 bonds for $700 million. It reserved the proceeds from the social bonds for the government's response to the COVID-19 pandemic.
The new 12-year notes priced at par to yield 5.375%, while the 2050 tap priced at 99.992 to yield 6.125%, sources said. The issue premium started at 75 basis points above the curve, but ended at 25 basis points, "a number that is in line with other countries," said a source familiar with the deal.
Guatemala put the initial price talk for the 2032 notes in the 5.875% area before launching the deal at 5.375%. For the 2050s, it put the IPTs in the 6.625% area and launched to yield 6.125%. Bank of America was the sole bookrunner on the two-part deal.
The sovereign issuer received orders from 180 accounts in Europe, the United States, Asia and Latin America, the Finance Ministry said in a statement. The ministry also said the new issue concession was less than what Panama, Israel and Abu Dhabi have paid.
Fitch Ratings downgraded Guatemala to BB- on April 6, citing poor tax collection, political gridlock and the economic impact of the coronavirus outbreak.
Nevertheless, Guatemala's 10-year bonds traded at 504 basis points above US Treasury bonds on Tuesday, less than Colombia (583 basis points) and Brazil (637 basis points), but more than Peru (346 basis points), said the investor in the Caribbean.
The new notes, according to a note from analyst Roger Horn at SMBC, "were trading well after market."
Guatemala is the third sovereign issuer in Latin America to go to the cross-border bond market since late January. Panama ended a two-drought on March 29 with $2.5 billion in 36-year notes at 4.5%. Then Peru stepped back into the bond market with $3 billion in a two-part deal on April 16.