Brazil's Fibria prices $1 billion; EMBI-Plus widens; Dubai rolls out two-part sukuk offering

By Paul A. Harris

St. Louis, Oct. 26 - Emerging markets were relatively quiet on Monday despite the backdrop of a substantial sell-off in U.S. stocks, according to a syndicate banker in New York.

The EMBI-Plus index ended the day 4 basis points wider at 301 bps bid, a market source said.

In the primary market Brazil's Fibria Overseas Ltd. priced $1 billion of notes at the tight end of the price talk.

Fibria prices, trades higher

Fibria priced $1 billion of 9¼% 10-year notes (Ba1/BB) at 99.20 to yield 9 3/8% on Monday.

The notes priced at the tight end of the 9½% area price talk.

Bank of America Merrill Lynch, Deutsche Bank Securities and JP Morgan were joint bookrunners.

Soon after pricing the notes were spotted at 101½ bid, 101¾ offered, versus the 99.20 issue price, according to a sell-side source who was not in the deal.

The Sao Paulo, Brazil-based paper and pulp company was generous with respect to the rate it printed on the new notes, the sell-sider commented.

The notes came with high double-B credit ratings, and there is implied recourse to the controlling entity, investment grade-rated Votorantim Celulose e Papel SA, the source added.

Dubai's two-part offer

Meanwhile a busy forward calendar continued to build during the Monday session.

Dubai is expected to price a benchmark two-part sukuk offering on Wednesday.

The deal is comprised of dirham-denominated five-year floating-rate notes, which are talked at a high 300 basis points spread to Euribor.

In addition Dubai plans to sell dollar-denominated five-year fixed-rate notes, talked at a high 300 bps area spread to mid-swaps.

Mitsubishi UFJ Securities, Standard Chartered Bank and UBS Investment Bank are leading the Regulation S offering.

BUMA sets guidance at 11½% to 12%

Indonesia coal mining company Makmur Mandiri Utama (Buma) is expected to price $300 million to $350 million of five-year notes on Wednesday, according to a market source.

The initial price guidance is 11½% to 12%.

Barclays Capital, Deutsche Bank, ING, and Macquarie Securities are leading the Rule 144A deal.

Also from Indonesia, PT Medco Energy International TBK is expected to sell $300 million of bonds before the end of the month, according to a market source.

Proceeds will be used to refinance notes maturing in 2010.

The prospective issuer is an oil and gas producer based in Jakarta.

No bookrunner names were heard.

CMPC roadshow this week

Chilean pulp and paper manufacturer Empresas CMPC SA is expected to begin a roadshow this week for a $500 million offering of 10-year senior unsecured notes (Baa2).

JP Morgan, Banco Santander and BNP Paribas are the underwriters.

Proceeds will be used to partially fund the acquisition of Aracruz Celulose SA's Guaiba unit for $1.43 billion.

"There are about five deals on the road right now," a banker remarked, with regard to the active forward calendar.

"And things are going to pick up," the banker added.

"There is likely to be a big rush of issuers appearing before third quarter results have to be incorporated."

Alluding to last week's news of record cash flows to the dedicated emerging markets bond funds, the banker said that there is ample cash to digest the supply of deals now surfacing from emerging markets issuers.

"There is a lot of cash out there for the right names," the banker said, adding that investors are going to focus on deals that are priced to hold up well in the secondary market.

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