Construction to double the canal's capacity is 64 percent complete, the Panama Canal Authority said on its website Sept. 10. The expanded waterway will be able to handle ships as long as 1,200 feet and as wide as 160 feet, compared with the current 965 feet and 106 feet, data on the website show.

That will accommodate 89 percent of the world's LNG carriers by 2015, Silvia Marucci, a liquid-bulk specialist at the canal authority, said at a conference in Singapore Oct. 30. LNG tankers will cross the canal about 850 times by 2025, she estimates. Only 4 percent of the 369 ships can fit through the waterway now, and just six of the vessels have entered in the past five years, according to data from IHS Maritime, a Coulsdon, England-based research company.

“This is a surprise for everybody -- nobody was expecting LNG to be flowing out of the United States,” Marucci said by phone Oct. 23. “We have had the same markets for a long time, and this possibility of receiving a new market that we have never seen before is a challenge for us and a great opportunity.”

Eoin Treacy's view Panama has been a major beneficiary from the increase in global trade that has accompanied the emergence of China and other Asian countries as economic powerhouses. The country has made great strides in terms of improving governance since the late 1989 intervention and signed a free trade agreement with the USA last year.

The expansion of the canal represents a major endeavour which appears to be on schedule and promises to further improve Panama's finances. However much of this good news was probably priced into Panama's BBB rated 7.125% 2026 bond when the yield bottomed near 3% by late 2012. The government of Ricardo Martinelli has spent a great deal of money on infrastructure projects with the result that Panama has not been immune from the selling pressure that gripped government bond markets this year. Yields surged to test the 5% area by September and a sustained move below 4% would now be required to question medium-term supply dominance.

Nevertheless, markets such as Panama with reasonable ratings and long-term potential for additional growth represent the types of markets that may be hit by collateral damage in the bond markets but that are unlikely to default and could offer attractive yields.

The growth of LNG tanker traffic predicated on US exports beginning in 2015 and the expansion of the Panama canal is likely to continue to be of benefit to dedicated LNG shipping companies.

US listed Teekay LNG (6.52%) has been ranging with a mild upward bias for nearly three years and found support last week in the region of the 200-day MA. Golar LNG (4.75%) has been ranging with a mild downward bias for nearly two years but has been consolidating mostly above the 200-day MA since August. Belgian listed Exmar (9.52%) completed a first step above its four-year base in August and continues to extend the breakout. It would be best bought following a reversion towards the 200-day MA.

Cheniere Energy Inc's Sabine Pass terminal will be the USA's first LNG export terminal and the share, which flirted with bankruptcy in 2008, has since rallied back to test its pre-crisis peak near $40. It is currently more than 30% overextended relative to the 200-day MA so some consolidation of recent powerful gains is increasingly likely.