Jumping into the market
It may be hard to remember after a summer of huge fund inflows, but at the start of 2016 EM bond markets were in full crisis mode. Issuance in Latin America and the Caribbean had been restricted to a handful of investment-grade sovereigns and quasi-sovereigns.
Previously, Dominican Republic, which just 11 years ago carried out a distressed debt exchange, would have been left on the sidelines with the rest of the high yield universe. But it negotiated conditions perfectly to jump into the market on a Friday (an usual day) with a $1bn 10 year deal, the first Lat Am high yield issue of the year, that showed an impressive nimbleness and pragmatism, said DCM and syndicate bankers at the time.
“Dominican Republic is one of the very few sovereigns in Central America and the Caribbean that has developed the ability to be opportunistic and go to market without a roadshow,” says Lisandro Miguens, head of Latin America DCM at JP Morgan. “January’s deal was a great example of the issuer’s prowess.”
Dominican Republic re-opened the 2026s at 109.335 in very different conditions in June, achieving a flat new issue premium.
“The republic has realised the importance of having a very professional public credit team,” says Miguens. “The country has had a great group of officials working in this area across various administrations.”
The issuer also earns credit for the development of its curve, its predictability and clarity, and its communication with investors even when a new issue is not imminent.
“Furthermore, it is an issuer that prices its bonds well, without trying to squeeze that last basis point,” says Miguens.