PNG’s first bond issue receives top review

LEADING financial news and data publication Global Capital Asia has just named Papua New Guinea’s debut US$500 million (K1.7 billion) bond issue as the best sovereign bond issue for 2018.
This comes on the back of Finance Asia’s achievement award for excellence in 2018, and The Asset’s country award’s best bond and best syndicated loan for 2018.
According to Global Capital Asia “it was a deal that nobody thought would get done,” adding, “it seemed impossible that a B2/B-rated country could successfully pull off a deal in late September, amid a particularly rough emerging market backdrop.
“Kudos need to go to the sovereign’s smart approach with its fundraising. It was vindicated with its strategy, as US investors drove the transaction, pushing orders to a peak of $3.8 billion (K12.8 billion) during book building. PNG also showed it’s savvy in other ways.
“While the hefty book could have easily allowed for a larger transaction, PNG made the prudent choice of keeping its bond at $500m so as not to put pressure on investors.”
The coupon and yield of 8.375 per cent were remarkable, considering the state of emerging markets at the time, and the frontier status of PNG itself. “Even a banker away from the deal lauded its execution, as well as final completion,” reported Global Capital Asia.
“While it may be unlikely that PNG will venture into the dollar market again in the near future, the sovereign deal is nonetheless monumental. Its success opens up the possibility of future issuance from other PNG borrowers, something that was just a pipe dream before.”