Abel returns from bonds roadshow

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Deputy Prime Minister and Treasurer Charles Abel returned to Port Moresby yesterday after leading an international roadshow to market Papua New Guinea’s inaugural sovereign bonds.
Abel and his delegation covered Singapore, Hong Kong, London, New York, Boston and Los Angeles in 10 days.
In a packed schedule arranged by global lead coordinator Credit Suisse and joint book-runners Citibank, the delegation made presentations to 100 global banks and fund managers at seven meetings per city. “Our international partners have done a fantastic job in arranging meeting and providing advice,” Abel , pictured, said.
“The interest has been really good with full meetings including all the major players. Everyone is interested in the PNG story.
“The market for emerging market or frontier market bonds has been rattled recently by the Turkey and Argentina economic problems but we believe PNG has a strong case regardless.
“We are looking at a five-year or 10-year benchmark minimum issue of US$500 million (K1.628bil). This is the minimum amount to qualify for the Emerging Market Bond Index and facilitate participation in the secondary market after issuance. Now that the roadshow is concluded, we will field offers for amounts and pricing (interest rates) before making a final decision to sell the bonds.
Of the potential proceeds, US$200 million (K650.45mil) will go into operation and capital costs and US$300 million (K976.26mil) will convert short-term (less than 12 months) domestic debt into long term debt. This will better balance our loan book and bring in foreign exchange.”
PNG will be looking to establish its brand and yield curve in the international market for the future,” said the DPM.
“Since the 2017 supplementary budget our Government through the 25-point plan has put revenue to GDP on an upward path, from 12 per cent of GDP to 16 per cent. Fiscal deficits are in a downward trajectory from 6 per cent to 2.4 per cent. Debt to GDP is a prudent level of 32 per cent. International reserves are stabilised at US$1.7 billion, being 10 months of non-mining import cover, and the forex market is coming back to balance.
“We are working on constraining our wage bill and interest costs. Oil prices are recovering well and we are negotiating the Papua LNG, Pynyang LNG and Wafi Golpu Projects. There are good times ahead for PNG if we remained focused and work hard,” Abel said. He was accompanied by Central Bank Governor Loi Bakani, Secretary for Treasury Dairi Vele, vice-Minister and Tambul-Nebilyer MP Win Daki and Finschhafen MP Rainbo Paita.

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