Buenos Aires returns to market after delay; African Bank sells notes at tight end of talk

By Paul A. Harris

Portland, Ore., Feb. 22 - Emerging markets appear to be grinding ever tighter, a New York-based syndicate banker said after the Wednesday close there.

However EM moved sideways during the Wednesday New York session, as equities were softer, the banker added.

Venezuela's sovereign bonds were a conspicuous bright spot, with Venezuelan spreads tightening on the hope that the country's leftist ruler, Hugo Chavez, might not be at the tiller much longer, the banker said.

In a relatively quiet primary market, the City of Buenos Aires and African Bank priced deals.

To the New York syndicate banker the primary market appears to be taking a bit of a breather, which is all right because it provides some time for the phenomenal amount of 2012 new issue supply to be soaked up.

Buenos Aires returns

Less than a week after it withdrew a bond offering due to market conditions, Buenos Aires priced a $415 million issue of non-callable five-year notes (expected ratings B2/B/B) at par to yield 9.95% on Wednesday.

The deal launched earlier in the Wednesday session at the same size and yield.

Barclays Capital, BTG Pactual and Citigroup were the bookrunners.

Proceeds will be used to repay debt and finance infrastructure projects.

Yield sensitive

Buenos Aires' cost of capital to a certain extent hinged on the fortunes of the Hellenic Republic of Greece, a syndicate banker remarked in the wake of Wednesday's pricing.

Maintaining that the city didn't really walk away last week, the banker said that with the prospect of a looming sovereign default, on the part of Greece, dragging down the higher beta global bond markets, investors eying new Buenos Aires bonds were demanding a yield north of 10%.

A few days later, with central bankers in Europe (and the luckless ever-capitulating holders of Greek sovereign bonds) having accomplished the latest Greek bailout, Buenos Aires managed to get its deal done with a 9.95% yield.

"Having that yield below 10% was important to them," the banker said.

African Bank at the tight end

African Bank priced a $350 million issue of five-year senior unsecured bonds at par to yield 8 1/8%.

The deal priced at the tight end of price talk, which was set at the 8¼% area.

Credit Suisse, Goldman Sachs, Standard Chartered Bank and Rand Merchant Bank were the bookrunners.

The deal tightened by 30 basis points during the London session, according to a trader there, who added that the bond's primary attraction seemed to be that it was an investment grade credit fetching a handsome yield.

Elsewhere in this trader's space, in a market which tightened during the European session, a conspicuous laggard was the new 3 7/8% notes due 2022 (A1/AA-/A+) of the Czech Republic.

The bonds came in a €2 billion issue at mid-swaps plus 160 bps on Monday, and sources said the size of the deal may be holding it back in the secondary market.

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