CDS tighten as buyers digest deals; Commercial Bank of Qatar prices; CEDC, Gerdau on the road

By Christine Van Dusen and Paul A. Harris

Atlanta, Nov 12 - Emerging markets credit default swaps tightened across the board on Thursday, reflecting a sense that investors may be having an easier time digesting the current level of supply and could be on the road to becoming less risk averse, a market source said.

Still, the market's "pretty quiet. There's not a lot of real money flows," the source said, pointing to the fact that new issuance so far in November totals $9 billion - far less than the $35 billion seen in October and the $40 billion in September.

"Investors are still just watching the market to see what happens in terms of volatility and preparing for next year when, for the most part, it's believed the Federal Reserve will raise rates," the source said. "There's a little bit of concern that we might be heading toward the final quarter of easy money."

Five-year credit default swaps tightened across the board at the European close, according to a market source.

Argentina five-year CDS ended the day at 1,009.015 bps mid, 39.09 bps tighter. Brazil closed at 119.705 bps mid, 4.925 bps tighter. Russia, at 177.74 bps mid, closed 4.915 bps tighter. Mexico ended the day at 145.565 bps mid, 7.28 bps tighter. And Venezuela finished at 1,039.9 bps mid, 55.925 bps tighter.

Among corporate names, OAO Gazprom five-year CDS were at 234.065 bps mid, 8.36 bps tighter. And Russia's VTB Bank closed at 337.14 bps mid, 7.825 bps tighter.

Market-watchers were keeping an eye on Central European Distribution Corp.'s €580 million equivalent offering of dollar- and euro-denominated seven-year senior notes, as well as the $450 million senior secured notes due 2014 from Barbados-based Columbus International Inc.

Columbus wrapped up its roadshow Thursday for the Rule 144A for life issue via Citigroup, Standard Bank and RBC Capital Markets.

"The market might not be overly receptive to this one, because the markets are still a little bit cautious at the moment," an emerging markets strategist said. "On the other hand there are not that many other issues to compete with. We're not seeing too much activity. It certainly won't be launched unless investors are receptive to snapping it up."

Also on the radar screen, according to a market source, are a possible dollar-denominated or sukuk offering from Bahrain's Gulf Investment Bank via Barclays Capital, GIB Financial, HSBC and UBS, and an offering of bonds from Abu Dhabi-based First Gulf Bank via BNP Paribas, Citibank, Deutsche Bank and HSBC.

"These could come out next week or the following week," the source said. "We're heading toward Thanksgiving and investors are going to be on holiday soon, and December is never a great month to bring anything to market. So they have to do it soon."

Meanwhile, Thursday featured the pricing of several issues: Commercial Bank of Qatar priced a $1.6 billion two-tranche bond offering, Prague's CEZ as priced €110 million medium-term notes at Euribor plus 45 bps and Poland's TVN Finance Corp. II AB priced a €405 million issue of 10¾% eight-year senior unsecured notes.

Also on Thursday, Delaware-based Gerdau Holdings Inc. set out on a roadshow for a benchmark dollar-denominated offering with HSBC, Santander, Itau, Bank of America Merrill Lynch, Citigroup and JP Morgan.

Commercial Bank of Qatar matches talk

Commercial Bank of Qatar priced a $1.6 billion two-tranche bond offering of $1 billion of five-year 5% senior unsecured notes (A1/A/) at 99.455 or mid-swaps plus 250 bps and $600 million of 10-year 7.5% subordinated lower tier II notes at 99.184 or mid-swaps plus 400 bps, according to a market source.

Both tranches came in line with price talk.

Credit Suisse and Morgan Stanley were the bookrunners for the Rule 144A and Regulation S offering, which was sold via subsidiary CBQ Finance Ltd.

Proceeds will be used to repay a $380 million syndicated loan facility and to fund future growth.

Bank of Qatar is a Doha, Qatar-based lender.

CEZ prices €110 million floaters

CEZ priced €110 million bonds at a coupon of Euribor plus 45 bps via Société Générale, the company said.

"They've been a frequent issuer in the conventional bond market and unconventional bond market," a source said.

CEZ is a Prague-based power distribution company.

TVN yields 11%

Poland-based cable TV operator TVN Finance priced a €405 million issue of 10¾% eight-year senior unsecured notes (B1/B+) at 98.696 to yield 11%, on Thursday, according to an informed source.

JP Morgan, Nomura and Calyon Securities were the joint bookrunners for the Rule 144A/Regulation S issue, which priced on top of the price talk.

Proceeds will be used to prepay the company's existing senior notes due 2013 and its secured credit facility, and for general corporate purposes.

Central European to price soon

Central European Distribution is marketing a €580 million equivalent offering of dollar- and euro-denominated seven-year senior notes, according to market sources.

The deal, which is being led by left bookrunner Goldman Sachs & Co., roadshows in the United States this week, then moves to Europe next week before wrapping up on Nov. 19.

Citigroup and Deutsche Bank Securities are joint bookrunners.

The Poland-based beverage producer and distributor is also marketing a concurrent offering of 9.5 million common shares.

Proceeds from the bonds and stock will be used to purchase Lion Capital's remaining stake in Russian Alcohol Group and to repay debt including Central European's outstanding secured notes due 2012.

Gerdau starts roadshow Friday

Gerdau Holdings has mandated HSBC, Santander, Itau, Bank of America Merrill Lynch, Citigroup and JP Morgan as joint bookrunners for a benchmark-sized dollar-denominated notes offering (expected /BBB-/BBB-), a market source said.

The Rule 144A and Regulation S offering will be launched subject to market conditions and will be preceded by a roadshow on Nov. 13 in Switzerland, Nov. 16 in Los Angeles and London, and Nov. 17 in New York and Boston.

"It's a name investors are quite familiar with, and it is investment-grade," a market source said.

Gerdau is a Delaware-based steel holding company.

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