EM sovereign bond spreads widen post Fed update; Ghana, Benin, Qatar Islamic Bank price

By Rebecca Melvin

New York, March 20 – Emerging markets sovereign bond spreads widened on Wednesday, moving back up into their current trading range – just as they were poised to break out of it – after the U.S. Federal Reserve indicated a more dovish mindset on monetary policy.

Ahead of the Fed news, the Republic of Ghana priced $3 billion in three tranches of notes due 2027, 2032 and 2051. The $750 million of eight-year notes priced to yield 8%, the $1.25 billion of 13-year notes priced with a coupon of 8Ό%. And the $1 billion of 32-year bonds priced to yield 8.95%.

The tranches saw strong demand as investors continue to seek out more yield.

Also pricing on Wednesday were the Republic of Benin’s €500 million of 5Ύ% amortizing notes due 2026 for a 6% yield, or a spread of mid-swaps plus 580.2 bps, and Qatar Islamic Bank SAQ’s $750 million five-year sukuk with a distribution rate of 3.982% and yield spread 150 bps over mid-swaps.

Now that the Federal Reserve meeting is out of the way, the expectation is that emerging markets will remain fairly steady in terms of new issuance and spreads, a market source said. “The changes in the next three to six months will be more of a second-order nature, more muted,” the source said.

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