Union Bank of India sells notes; Pacific Andes, TMK on tap; Banco do Brasil trades well

By Christine Van Dusen

Atlanta, Jan. 14 - Union Bank of India priced notes on a Friday that was mostly quiet and a touch weaker amid tepid U.S. economic data and a ratings downgrade for Greece, which helped keep the euro zone's financial crisis on the market's mind.

"The market is quiet but firm overall," a Brazil-based market source said.

Said a London-based trader, "The theme this week was active mornings and lackluster afternoons, and today was no exception. Generally bonds were 5 to 10 basis points tighter over the week; however, they lagged today given the U.S. Treasury move to 3.27%."

Overall, prices didn't move much, said Enrique Alvarez, senior debt strategist with think tank IDEAglobal. "It's just a down-tick or two here or there."

Consumer prices in the United States in December increased 0.5%, the most seen since June 2009, while retail sales climbed a less-than-expected 0.6% in the month. This, plus continued concern about peripheral Europe and inflation in Latin America, made for a weaker Friday session.

"Local bond markets remained under pressure," according to a Barclays Capital report.

Venezuela, for one, was "bouncing, and that's because it's been a laggard," Alvarez said. "With crude up above $91 a barrel, in this environment you would expect Venezuela to be much stronger. Today it's better on the day, making up some ground."

The sovereign's 2027 bond was at 75 bid on Friday, about 10 bps tighter, Alvarez said. "That 75 bid is a high for the cycle. For the last couple of months we haven't seen anything much higher than 75."

He noted some selling on the back end of Mexico and Peru. "Silver got slaughtered today. It's weak, and Mexico is in that game," he said.

"Other than that, the market is holding," he said.

MENA region outperforms

Flows were skewed toward better buying of credits in the Middle East and Africa, the London trader said.

"With troubles in Africa and the Euroland issues still lingering, commodities are still doing well - with oil at $91 a barrel - and decent local bank results, a huge infrastructure pipeline and supply still scarce, the region has done very well so far in 2011," he said.

He pointed to the short-end Abu Dhabi National Energy Co. bonds, long-dated Lebanon and retail flow for Kuwait's Kipco and Qatari Diar Finance.

"The unrest in Tunisia is worrying, and five-year credit default swaps have moved out to 182 bps bid, 187 bps offered," he said. "The bonds are pretty illiquid, as one would expect. Tunisia's 2020 bonds are off 3 to 4 points on the week."

UBI does deal

In the primary market on Friday, Union Bank of India priced a CHF 160 million issue of notes due 2016 to yield mid-swaps plus 200 bps. The Securities and Exchange Commission-registered notes, via Barclays Capital, were talked at the mid-swaps plus 200 bps area.

This followed Thursday's pricing of Banco do Brasil's €750 million 4½% notes due Jan. 20, 2016 at 99.453 to yield mid-swaps plus 200 bps, a market source said.

Banco Votorantim, BB Securities, BNP Paribas and Deutsche Bank were the bookrunners for the deal.

"That deal is trading well on the secondary market," the Brazil-based market source said. "It's at 100.25 bid, 100.50 offered, almost 1 point from where it came."

Also on Thursday, Chile-based forestry products company Inversiones CMPC SA priced $500 million 4¾% notes due Jan. 19, 2018 at 99.524 to yield Treasuries plus 275 bps, a market source said.

Citigroup, Itau and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for general corporate purposes.

Evergrande prices notes

And China-based residential property developer Evergrande Real Estate Group Ltd. priced a two-tranche RMB 9.25 billion issue of dollar-settled notes, a market source said.

The deal included RMB 5.55 billion notes due Jan. 19, 2014, which priced at par to yield 7½%, and RMB 3.7 billion notes due Jan. 19, 2016 that priced at par to yield 9¼%.

Bank of America Merrill Lynch, Deutsche Bank, Citigroup and BOC International were the bookrunners for the Regulation S notes, which are callable for three years and include a change-of-control put at 101%.

Not less than 45% of the proceeds will be used to fund the repayment of onshore bank borrowings and to replenish cash reserves that have been used to repay onshore bank borrowings since Jan. 1, according to a company filing. The remaining portion will be used for general corporate purposes and to finance the company's existing and new property projects.

Pacific Andes taps dealers

Hong Kong-based seafood company Pacific Andes Resources Development Ltd. has mandated Bank of America Merrill Lynch, HSBC and Standard Chartered as bookrunners for an issue of renminbi-denominated notes, a market source said.

The notes will carry a maturity of between three and five years, according to a company announcement.

A roadshow for the Regulation S senior notes will begin Monday and travel through Singapore and Hong Kong.

Proceeds will be used for general corporate purposes, to fund capital expenditures and working capital, and to refinance a portion of existing debt.

TMK plans roadshow

And Russia-based welded pipe producer, supplier and distributor OAO TMK has mandated Barclays, Deutsche Bank and UBS as bookrunners for a dollar-denominated issue of notes, a market source said.

A roadshow for the Regulation S transaction will start Monday and travel through Asia and Europe.

"I definitely expect some supply next week, into this supportive market," the London trader said.

"You've got plenty of supply on the corporate side; you see them coming through all the time," Alvarez said.

But sovereigns, particularly in Latin America, are not doing much in the way of issuance right now.

"They're making an effort not to signal that they're coming in with very large quantities," Alvarez said. "Venezuela is the biggest risk in that sense. There are so many different angles on the financing-needs side. Core credits are very guarded in giving some sort of preannouncement. Action is dedicated to the corporate side."

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