“Not a Penny Left on Table,” Says Panama

Panama’s $323m reopening of its 2015 bonds was not priced cheap, its public credit officials say. Nor was it hindered by Wednesday’s US Treasury rally that caused other EM deals to wait, contrary to what investors and bankers suggest, government officials tell LatinFinance. “I don’t think we left a penny on the table,” says a senior official at the directorate of public credit at Panama’s ministry of finance. Demand would have been much higher than twice the offer if the deal had been priced too cheap, he adds. The official explains that the order book built slowly to oversubscription, compared to much faster accumulation during last year’s tap of the 2015s. He also claims that some investors opted out due to tight pricing. The transaction was also out of the market by the time the FOMC announcement moved US Treasury bond prices, the official explains, and was therefore not adversely affected by those events. “We thought it was a very successful transaction, especially considering the markets,” the official says. “We got $323m at the lowest new issue premium this year,” the official adds. Panamanian officials say they got a 38bp premium, versus up to 60bp paid by other sovereigns this year. They say the sovereign adhered to a strict maximum of 40bp for this transaction. Priced at 101.0, the bond traded up to 102.0 after issue and was quoted by traders at 102.5-103.5 late Wednesday, a yield of 6.53%-6.73%, versus 7.04% at reopening. “A new 10-year bond would have been the sweet spot, but we saw demand skewed towards the 2015, and decided that would offer better value for the republic,” the official says. He adds that $1.5bn is a good size for the 2015 and Panama would consider both a retap and a new bond in future fundraising. Funds raised Wednesday complete the sovereign’s budget needs for 2009, and Panama officials decline to speculate on any pre-financing for 2010. Morgan Stanley and UBS managed the transaction, which was widely criticized by competing bankers and