CSN initial guidance surfaces; Mandates from Indonesian, Philippine corporates; EMBI tightens

By Paul A. Harris

Portland, Ore., Sept. 11 - A quiet Friday session in emerging markets saw the EMBI-plus index tighten by 7 basis points, according to an investor on the U.S. West Coast, who spotted the index at 358 bps bid.

A trader in London saw emerging markets debt stronger across the board, near the close of the Europe session.

"We've not been hugely busy, but we're seeing mostly buyers," the trader said.

CSN releases guidance

Brazilian steel firm Companhia Siderurgica Nacional set initial price guidance for its upcoming offering of dollar-denominated 10-year senior notes (Ba1/BB+/BBB-) at 7% to 7¼% on Friday.

The size of the deal remains to be determined, but is expected to be $750 million, a market source told Prospect News.

The roadshow is set to wind up on Monday in Los Angeles.

Morgan Stanley and Banco Itau are joint bookrunners.

Asian corporate mandates

The market heard mandate news regarding a pair of Asian corporates on Friday.

SM Investments Corp. named Barclays Capital and Citigroup to lead a dollar-denominated offering of fixed-rate bonds.

The Pasay City, Philippines-based commercial properties company will use the proceeds for general corporate purposes including refinancing of existing debt.

Meanwhile Indonesian coal mining firm Bukit Makmur Mandiri Utama (BUMA) hired Barclay's Capital, Deutsche Bank and ING for a dollar-denominated Rule 144A/Regulation S bond offer.

Marketing begins in Singapore on Monday and winds up in Los Angeles on Sept. 21.

Juice off the table

One of the past week's big issues, a $1.5 billion two-tranche deal (Aa2) from Abu Dhabi National Energy Co. (TAQA), was trading above new issue price on Friday, according to a trader in London.

To recap, earlier in the week TAQA priced $1 billion of 4¾% five-year notes at a 250 bps spread to Treasuries and $500 million of 6¼% 10-year notes at a 287.5 bps spread to Treasuries.

Both tranches were up 1 to 1½ points at the close of Friday's London session.

A month ago both of the tranches would likely have been up 4 to 5 points in the secondary, the trader said.

"Some of the new issue juice has come off the table," the source explained.

"Now issuers are pricing things a little more aggressively, and they can get away with that because investors want more risk and have cash to burn."

The same trader mentioned that another of the week's deals - this one a central European high-yield corporate - was well above issue price.

Czech Republic-based Central European Media Enterprises Ltd.'s new issue of 11 5/8% seven-year senior secured fixed-rate notes (B2/B), €200 million of which priced earlier in the week at 98.261 to yield 12%, were at 103 bid, up 4 or 5 points, the trader said.

Ukraine: no shortage of bad news

The London trader, who also focuses on Ukrainian debt, said that the negative news from that country had not had any overwhelming impact on its bonds.

On Thursday the markets learned that Ukraine's credit ratings are under pressure on news that it may not have further access to the next tranche of its $16 billion IMF loan.

Also there are headwinds facing Ukrainian state energy firm Naftogaz's restructuring effort, involving $500 million of its 8 1/8% eurobonds which come due on Sept. 30, approximately a fortnight from now.

Yet despite the bad news, Ukraine's 6.58% dollar-denominated bonds due 2016 were at 76¼ bid, 77 offered on Friday, unchanged on the week, the trader said.

Meanwhile the above-mentioned Naftogaz 8 1/8% notes were at 83 bid, 86 offered on Friday, down from 86 bid, 88 offered at the beginning of the week.

"Ukrainian corporate bonds have seen a slight negative impact because of the ongoing situation with Naftogaz," said that trader.

"It has slightly taken the wind out of the sails of what has been a general bullishness in Ukraine debt.

"Nevertheless, prices remain significantly higher than they were three to six months ago."

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