Wednesday, May 3, 2017

Dominican Republic new USD bond maturing in 2027 with 5.95% coupon

Dominican Republic issued on January 18, 2017 a new US dollar-denominated 10-year bond (Reg S issue), bookrunner of the new issue was JP Morgan and local bank BanReservas was co-manager on the offering, with Bank NY Mellon as Trustee and Paying Agent. 

Initial settlement: 01/25/2017
Maturity: 01/25/2027
Coupon: 5.95%
Size: 1.2 USD bn
Rating: B+

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Dominican Republic Jan 2017 USD Bond prices

This bond was issue at par and it is now trading at around  105.01 as of writing this yielding approximately 5.28%), it has been benefiting from global high yield demand: the iShares JPMorgan USD emerging market bond ETF (whose average duration is almost the same of this DR bond)  has rallied 5 big figures as well over the same period.

JP Morgan Emerging Markets Bonds ETF  and USD 10year Notes yield

The Dominican republic Sovereign spread is trading at the lowest level of the last 10 years around 300 basis points over Tresuries and at these levels any risk aversion episode could heavily weigh on the spread. 

The Dominican Republic has a 2.75% weight on the Jp Morgan Emerging Bond Market Index EMBI and the ETF tracking this index (trading symbol EMB) owns 300 mios uSd worth of Dominica Republic USD denominated sovereign debt, the exact issues owned by EMB are:

Click on the table to enlarge