EM LATAM CREDIT: The Dominican Republic (DOMREP; Ba3pos/BB/BB-pos): IG Rating
“Dominican Republic President Says Investment Grade Is in Reach” – BBG
Neutral for spreads
• DOMREP issued a twelve-year note February 2025 at 6.95%, last quoted 6.73% helped by falling US Treasury rates. A rating upgrade is likely in the next twelve months in our view though priced in when compared to higher rated Guatemala (GUATEM: Ba1/BBpos/BBpos) with 2036 bonds quoted only 16 bps apart.
• At an interview at the presidential palace President Luis Abinader noted that part of the country’s financing was already done at investment grade rate levels.
• Consider also much higher rated United Mexican States (MEX; Baa2/BBB/BBB-) with recently issued 12-year notes quoted only 23 bps lower than DOMREP 12-year notes.
• The IMF noted in a report last year that the Dominican Republic’s interest rates on public debt are high relative to other countries which crowds out spending on infrastructure and social services. An investment grade rating would lower over time that interest cost.
• The IMF projects 2025 real GDP growth of 5% and CPI of 4.5%.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
LOOK AHEAD: Monday Data Calendar: S&P Mfg PMIs, ISMs, Fed Speak
- US Data/Speaker Calendar (prior, estimate)
- 3-Mar 0945 S&P Global Mfg PMI (51.6, 51.6)
- 3-Mar 1000 ISM Mfg (50.9, 50.8)
- 3-Mar 1000 ISM Prices Paid (54.9, 56.3)
- 3-Mar 1000 ISM Orders (55.1, 54.6)
- 3-Mar 1000 ISM Employment (50.3, 50.1)
- 3-Mar 1000 Construction Spending MoM (0.5%, -0.1%)
- 3-Mar 1130 US Tsy $76B 13W, $68B 26W bill auctions
- 3-Mar 1235 StL Fed Musalem on economy, mon-pol (text, Q&A)
BUNDS: Testing the 132.00 figure
- Some momentum selling in Bund as it breaks below 132.00, the 30yr Buxl part of the curve still leads.
- Buxl targets 126.10, the February low, and a break through could open to 124.84, the 2025 low.
- Bund is now eyeing the 131.84 gap.
- The German 5/30s sees resistance at 60.512, the 28/07/22 high.
EGB OPTIONS: RXJ5 130.50/130.00 Put Spread Sold
RXJ5 130.50/130.00 put spread, 20K sold at 13.5 vs. 132.25 9% delta.
