Emerging markets active; Turkey, Southern Copper, MOL price; Bancomer plans note offering

By Christine Van Dusen

Atlanta, April 13 - New issuance in emerging markets continued its steady but somewhat slow and methodical pace on Tuesday with the pricing of deals from Turkey, Southern Copper Corp. and MOL Hungarian Oil and Gas, market sources said.

"Emerging markets are kind of par for the course today," a New York-based market source said. "You don't see five or six deals per day. But it's been a relatively active pipeline. There are things in the works, and rumor-ville, and the market continues to perform well."

The primary is clicking along, he said. "New issues continue to get done at a healthy pace."

Case in point: Tuesday saw a new deal from Turkey, which brought to market €1.5 billion 20-year notes at mid-swaps plus 190 basis points via Commerzbank, Credit Suisse, Deutsche Bank and DZ Bank.

And Latin America-focused Southern Copper priced a $1.5 billion two-tranche deal, with $400 million 5 3/8% 10-year notes priced at 99.481 to yield Treasuries plus 162.5 bps and $1.1 billion 6¾% 30-year bonds priced at 99.25 to yield 6.809%, or Treasuries plus 212.5 bps. Both tranches priced at the tight end of talk.

"We invested or made an additional investment [in Southern Copper] in the beginning of the year," said Luz Padilla, lead portfolio manager of the DoubleLine Emerging Markets Fixed Income Fund, in a Tuesday webcast. "Since we bought that at the beginning of the year, it has tightened 50 basis points and the credit has done well. It came today and continues to tighten.

"It wasn't well followed when it made its introduction today, but it caught the attention of crossover players and developed market investment players. They see the potential of that credit and the ability of spreads to continue to tighten."

Also during the webcast, Padilla described emerging market debt as having a growth trajectory similar to that of many developed markets, as well as "underlying potential" and "further upside."

Padilla and her company, California-based investment advisory DoubleLine, are "big believers in not just the sovereign story but the corporate story," she said. "Most of the opportunities in terms of valuation and underlying credit quality are in the corporate sector."

MOL prices, Bancomer launches

Also on Tuesday, Budapest-based MOL Hungarian Oil and Gas priced €750 million seven-year bonds at mid-swaps plus 315 bps. BNP Paribas, Deutsche Bank, RBS and Unicredit were the bookrunners for the deal, which came in below guidance of mid-swaps plus 320 bps.

Proceeds will be used for general corporate purposes.

MOL Hungarian is a fuel distributor.

The day also saw Mexico's Grupo Financiero BBVA Bancomer SA planning an issue of 10-year tier 1 notes. Deutsche Bank and Goldman Sachs are the bookrunners for the deal, which should price "sometime this week," a source said, "maybe tomorrow or Thursday."

BBVA Bancomer is a Mexico City-based lender.

Also coming soon is Lima-based Banco Internacional del Peru SAA's planned $150 million step-up junior subordinated notes due 2070 via Bank of America Merrill Lynch and JPMorgan, the New York source said.

"Other than that, it looks to be relatively quiet," he said. "It's a healthy pace but nothing crazy."

Turkey prices deal

Turkey priced €1.5 billion 10-year notes (Ba2/BB/BB+) at mid-swaps plus 190 bps, according to a market source.

Commerzbank, Credit Suisse, Deutsche Bank and DZ Bank were the bookrunners for the deal.

Southern Copper prices notes

Southern Copper priced a $1.5 billion issue of senior unsecured notes (Baa2/BBB-/BBB) in two tranches in late afternoon on Tuesday, a market source said.

This came a week after the offering was announced on April 6 and a roadshow that ran from April 8 to April 12.

The $400 million tranche of 5 3/8% 10-year notes priced at 99.481 with a spread of Treasuries plus 162.5 bps. There is a make-whole call of Treasuries plus 25 bps.

The yield came at a spread that was tighter than initial talk on Monday of a range of 175 bps to 187.5 bps over Treasuries. That was revised on Tuesday to a range of 162.5 bps to 175 bps, a source said.

A $1.1 billion tranche of 6¾% 30-year bonds sold at 99.25 to yield 6.809% with a 212.5 bps over Treasuries spread. They are callable at a make-whole amount of Treasuries plus 35 bps.

The 30-year bonds also priced at the tight end of talk in the 212.5 bps to 225 bps range.

Both tranches feature a change-of-control put of 101%.

Bookrunners were Credit Suisse Securities, Goldman Sachs & Co. and Morgan Stanley & Co.

Proceeds are being used for general corporate purposes, including financing capital expenditures.

The copper producer has operations in Peru, Chile and Mexico and is based in Phoenix.

Andrea Heisinger contributed to this report

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