Philippines, Celulosa Arauco, Vale Overseas print bonds during solid, slow session for EM

By Christine Van Dusen

Atlanta, Jan. 4 - The Republic of the Philippines, Chile's Celulosa Arauco y Constitucion SA and Brazil's Vale Overseas Ltd. sold notes on Wednesday, opening up the dormant pipeline of new issuance on an otherwise solid but slow day for emerging markets assets. The day was marked by continued anxiety about the global economic crisis.

The investor worries were fueled by remarks from Luxembourg prime minister Jean-Claude Juncker, who said the European Union is on the brink of recession, as well as the fact that Hungary is struggling to obtain a bailout from the International Monetary Fund. Also of concern: China's housing prices fell.

"With the problems so obvious that the majority of people are underweight, the marginal good news that is coming out means that prices everywhere are well supported," a London-based trader said. "There are loads of prices but little action, even from retail investors."

The day's winners, he said, were Brazil and Mexico for successfully printing notes on Tuesday.

"They easily placed new issues at record low yields," he said.

Meanwhile, South Africa's curve repriced 20 basis points wider on decent Street selling.

"South Africa either has contagion or is planning a new issue," he said. "In Turkey we have finally seen some selling of bank paper, but the rest of the corporates there remain firm. And Russia is still on holiday, aside from the Gazprom 2015 squeeze."

Overall, activity was limited on Wednesday and spreads widened.

"We've come to accept this will be a half-hearted week," he said.

Philippines sells bonds

In its new deal, the Philippines priced a $1.5 billion issue of 5% notes due Jan. 13, 2037 at par to yield 5%, or Treasuries plus 196.2 basis points, according to a company filing.

Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Standard Chartered Bank and UBS were the bookrunners for the Securities and Exchange Commission-registered deal.

Proceeds will be used for general budgetary purposes.

Celulosa Arauco does deal

In another new deal on Wednesday, Chile-based pulp and forestry company Celulosa Arauco priced a $500 million issue of 4¾% notes due Jan. 15, 2022 at 98.53 to yield 4.938%, or Treasuries plus 295 bps, a market source said.

Scotia Capital, JPMorgan and Itau BBA were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to refinance debt and for general corporate purposes.

Vale prints notes

Also on Wednesday, Brazil-based Vale Overseas priced a $1 billion issue of 4 3/8% notes due Jan. 11, 2022 at 98.804 to yield 4.525%, or Treasuries plus 255 bps, a market source said.

Citigroup, HSBC, JPMorgan, BB Securities and Bradesco BBI were the bookrunners for the SEC-registered deal.

Proceeds will be used for general corporate purposes.

The notes are guaranteed by parent company Vale SA, a Rio de Janeiro-based mining and logistics corporation.

Mexico deal oversubscribed

This followed the late-Tuesday pricing of Mexico's $2 billion issue of 3 5/8% notes due March 15, 2022, which came to the market at 99.322 to yield 3.706%, or Treasuries plus 175 bps, a market source said.

Deutsche Bank and Morgan Stanley were the bookrunners for the SEC-registered deal, which was talked at the Treasuries plus 180 bps area.

Proceeds will be used for general government purposes, including the refinancing, repurchase or retirement of domestic and external debt.

The notes include a make-whole call at Treasuries plus 30 bps.

The order book totaled $5 billion with about 260 investors involved, according to an announcement from the Finance Ministry.

Kexim plans notes

In other deal-related news on Wednesday, South Korea-based lender Export-Import Bank of Korea (Kexim) was planning a two-tranche issue of dollar notes, according to a company filing.

Bank of America Merrill Lynch, BNP Paribas, Citigroup, Deutsche Bank, HSBC and RBS are the bookrunners for the SEC-registered deal.

Proceeds will be used for general operations, including extending foreign currency loans and for the repayment of maturing debt and other obligations.

BTA Bank in focus

Some market-watchers were taking a look at Kazakhstan's BTA Bank, which has failed to pay its coupon and faces a second restructuring.

"The potential second restructuring is likely to impact only the issued debtholders while leaving depositors and trade finance unaffected," an analyst said. "It is our belief that if no such restructuring is accepted ... and non-payment of the coupon occurs, then the bank will fall into receivership and default on all its obligations. The implications of such an event are difficult to estimate, given the unclear documentation."

Or, as a trader put it: "The situation remains as clear as mud. The senior 2018s are well bid at 18 while the 2025s trade down at 4."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.