Papua New Guinea steps onto global stage with debut bond
$500 million bond was third attempt since 2013; makes Credit Suisse loan commitment look shrewder.
Papua New Guinea’s $500 million debut sovereign bond marks an important step for the Pacific nation.
It is quite a feat. This is the third time the country has at least started the process of raising a sovereign bond. It tried through Barclays, BNP Paribas and JPMorgan in 2013, then met fixed income investors in 2016, but did not move to a formal roadshow.
This attempt, through joint leads Credit Suisse and Citi, faced particular challenges: a single B-rated first-time emerging market issuer, launching during a period of capital flight from the emerging world amid the threat of a US-China trade war and rising rates globally.
But the 10-year deal was seven times oversubscribed, tightened its price through the deal from 9% guidance to 8.375%, and could have raised much more than the $500 million it eventually took.
“While we conducted our roadshow during a volatile period for emerging countries, we believe the quality of our credit ultimately stood out and translated into the high demand for our bond,” says Charles Abel, deputy prime minister and treasurer of Papua New Guinea.
“As this was a first-time issuance by PNG, some investors were unfamiliar with our value proposition and economic fundamentals,” he adds.