Cyprus, Suzano price; new Suzano holds up in secondary; DP World talks four tranche deal

By Rebecca Melvin

New York, Sept. 17 – The emerging markets debt market welcomed two new issues on Tuesday. The Republic of Cyprus priced €1.5 billion of 2 3/8% 10-year notes on Tuesday at 99.780 for a yield of 2.4%, and Brazil’s Suzano Papel e Celulose SA priced $1 billion of 6% 10-year notes (BBB-) at 99.065 late Monday to yield 6 1/8%.

The Suzano deal was on the calendar and had completed roadshow meetings but was delayed by a couple of weeks due to market volatility in early September. The new Suzano paper saw good demand and was “holding up pretty well” in the aftermarket. It was quoted at 99½ bid, 99.60 offered, by a syndicate source.

The Brazil-based pulp and paper company was “the first one out the gate after the summer lull” for the Latin America region, a New York-based market source noted.

“Pricing on the primary seen as constructive,” the source said, citing a new issue concession of 12.5 to 25 basis points, depending on the value assigned to curve adjustment from the outstanding Suzano 2026 paper.

There was strong appetite for the BBB corporate credit. But “appetite might have been slightly subdued given that more supply is expected from Suzano,” the source said.

Many had expected a deal of $2 billion in size, but given recent market tone, the $1 billion deal size was not surprising.

“Overall execution was strong and should send a go message for other issuers looking at the market,” the market source said.

Meanwhile, Dubai’s DP World Ltd. and DP World Crescent Ltd. was looking to put final prices on four tranches including a 10-year dollar-denominated sukuk, or Islamic bond, a dollar 30-year note, a euro-denominated eight-year note and a sterling-denominated 12-year note, according to a syndicate source.

During the session on Tuesday, order books were in excess of $2 billion for the sukuk, which was being guided to price with a yield of mid-swaps plus 185 bps.

The 30-year notes were seen pricing with a yield between 5¾% to 5.8%, and books were in excess of $1 billion.

The euro notes that mature Sept. 25, 2026 were guided to a yield spread of mid-swaps plus 175 to 180 bps, from initial talk at mid-swaps plus 185 bps, and books stood at more than €950 million.

The 12-year note denominated in pounds sterling was guided to a price of 270 bps to 280 bps, and books stood at more than £280 million.

DP World is also making a tender offer for an existing $650 million of sukuk trust certificates due 2019.

The cash tender, which is contingent upon successful completion of the new sukuk, is being led by dealer managers Citigroup, First Abu Dhabi Bank and HSBC and co-lead managers Abu Dhabi Commercial Bank, Dubai Islamic Bank and Emirates NBD.

Barclays, Citigroup, HSBC and Societe Generale are bookrunners for the Rule 144A and Regulation S euro and 30-year dollar deals.

Dubai-based DP World is a logistic, marine and inland container terminal operator.

National Bank of Oman was also in the market for a five-year benchmark of dollar bonds that were being talked at mid-swaps plus 275 bps plus or minus 5 bps, according to a market source on Tuesday.

Order books had reached $1.1 billion during the session.

The talked yield spread was wide by Gulf Cooperation Council bank standards. But Oman banks were not as strong as the others such as Saudi or Abu Dhabi banks, a London-based source said.

Suzano prices $1 billion note

After saying that it was postponing its deal to monitor markets, Suzano pulled the trigger on its 10-year dollar notes late Monday.

The issuer Suzano Austria GmbH priced $1 billion of 6% 10-year notes at 99.065 to yield 6 1/8%, according to a syndicate source.

Initial price talk for the Rule 144A and Regulation S notes was 6 3/8%, and there were more than $3 billion of orders for the new issue, which was postponed following roadshow meetings two weeks ago because of market volatility and which represents the first new paper for the Latin America region debt market in two months.

Proceeds will be used to fund the company’s merger with Fibria Celulose SA.

BNP Paribas, JPMorgan, Mizuho, Rabobank and others were bookrunners for the issue.

Cyprus prices €1.5 billion

After announcing its intension to price a new note on Monday, Cyprus concluded the transaction with a 2 3/8% 10-year notes at 99.780 for a yield of 2.4%, according to a syndicate source.

Pricing on the Regulation S notes was tightened from the 2½% area when books opened and from the 2.6% area ahead of books opening.

Barclays, JPMorgan, Morgan Stanley and Societe Generale CIB were joint lead managers for the issue, which had orders in excess of €5.675 billion when the books closed.

© 2015 Prospect News.
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