Vakifbank launches $650 million notes; Genneia prices tap; EM eyes upcoming Fed meeting

By Rebecca Melvin

New York, Jan. 23 –The Middle East region was more active on Tuesday joining in on what started off as a week initially focused on Emerging Europe & Central Asia.

Turkiye Vakiflar Bankasi TAO (Vakifbank) launched a dollar benchmark offering of five-year bonds to yield 5.85%, which was tighter than talk in the 6% area.

Turkey’s currency was stable, and the price of a recently priced Turkish sovereign note due 2028 was up on Tuesday and trading with an indicated yield of 5.32%, which was 2 basis points lower on the day.

The sovereign’s 2028 notes priced with a spread of Treasuries plus 267 bps and was currently Treasuries plus 270 bps, so steady at mid-market around reoffer on a credit spread basis, a market source said.

Other deals from the Middle East announced on Tuesday included Emirates Airline’s up to $1 billion sukuk, a deal for the Qatar National Bank being priced in Australian dollars, and one from Dubai’s Emirates NBD Bank, which mandated banks and will hold roadshow meeting in Switzerland starting Wednesday for a Swiss franc-denominated notes with intermediate maturity.

Meanwhile in Latin America, Argentina’s Genneia SA priced a $150 million reopening of its 8¾% notes due 2022 on Tuesday for a total deal size now at $500 million.

The Rule 144A and Regulation S notes priced at 109 to yield 5.967%. The power company initially priced $350 million of the 8¾% notes in January 2017.

On tap for Wednesday is a $200 million offering of subordinated perpetual notes for Mexico’s Unifin Financiera, SAB de CV Sofom ENR.

Initial price talk for the Unifin deal is for 9¼% yield. Proceeds will be used for working capital and to expand its business.

There are also deals on the calendar for Latin America for Thursday including Natura Cosmeticos SA.

Looking ahead, the emerging primary market is expected to remain strong in the coming weeks even as eyes begin to turn to next week’s meeting of the Federal Reserve’s Open Market Committee set for Jan. 31 to Feb. 1.

This meeting will be carefully monitored for clues regarding whether officials are still on track for three 0.25% rate increases this year. The Fed last raised its benchmark federal-funds rates in December by 0.25% to a range of between 1.25% to 1.5%.

Investors in the emerging credit space are sanguine about a gradual rise in rates, and if the raises proceed as expected it should not derail the markets, a New York-based market source said.

But if the Fed were to suddenly think it was behind the curve and there was an unexpected change, “that could cause a minor adjustment to valuation of EM, but there would not be an exodus of capital,” the market source said.

Right now investors are ready to buy and “the message to issuers is that if they have funding needs to take advantage of the current environment,” the source said.

In addition to Fed focus, investors were watching the European Central Bank, which is expected to release some changes to its forward guidance at its upcoming meeting. “The message is that the market is data dependent and as long as the data is in line that should continue to fuel appetite in the market,” the market source said.

© 2015 Prospect News.
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