Bigger does not necessarily mean better. Just look at the relative performances of Russia’s and Egypt’s sovereign bonds. Both were launched on April 21. While the Russia deal came with tremendous fanfare – the sovereign’s first issuance in 12 years – the Egypt bond – its first in nine – almost slipped by unnoticed.
Russia raised $5.5 billion through five-year and 10-year tranches. The five-year was launched at a spread of 125 basis points over US treasuries, while the 10-year tranche came out at 135bp over. On May 21, they were trading at 252bp over and 272bp over respectively, an indication that the deal was priced too tightly.
Egypt, by contrast, has weathered the volatility much better. It raised $1.5 billion through 10-year and 30-year tranches. The 10-year had widened by just 6bp through May 21, going from 260bp over to 266bp over. The 30-year had widened from 299bp over to 333bp over.
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"Egypt chose a wise moment to tap the market. The pricing was helped by the rarity of Egyptian sovereign issuance in the dollar market" Andrew Dell, HSBC |
"Egypt chose a wise moment to tap the market.
