Latin America primary busy as U.S. equities drop, rates volatile; new Israel Electric flattish

By Rebecca Melvin

New York, Feb. 8 – The emerging market bond space saw a number of new deals price in the Latin America region on Thursday, including the launch of sister tranches for the Dominican Republic in dollars and pesos for a combined $1.817 billion, amid another forceful selloff in U.S. equities that left the indexes in correction territory, while U.S. rates were volatile.

The yield on the 10-year U.S. Treasury benchmark reached as high as 2.88% during Thursday’s session before settling around 2.83%.

In addition to the Dominican Republic tranches, Unifin Financiera, SAB de CV Sofom, ENR priced $300 million of eight-year notes to yield 7 3/8%, Brazilian steelmaker Companhia Siderurgica Nacional SA priced $350 million of five-year senior notes, TerraForm Global Inc. priced a $400 million issue of eight-year senior notes to yield 6 1/8%, Gran Tierra Energy International Holdings Ltd. priced a $300 million issue of 6¼% seven-year senior notes to yield 6½%; and Creditvalores-Crediservicios SAS priced a $75 million tap of its 9¾% notes due 2022 at 104 to yield 8¾%.

Elsewhere, Greece, which attracted some EM investor interest, although it is not considered an emerging markets name by everyone, priced €3 billion of 3 3/8% seven-year notes at a reoffered price of 99.236 for a yield of 3½%.

Also Israel Electric Corp. Ltd. priced a $1 billion deal of 4¼% notes, which traded flat to lower in the aftermarket.

The notes of the publicly controlled utility were trading at 98.75 bid, 99 offered recently, compared to their reoffering price of 99.089, according to a London-based market source.

Volatility in the broader markets has stoked some concerns for EM. Wednesday’s 567-point swing in the Dow Jones industrial average ending with just a 0.1% decline, or 19 points, and on Thursday the index tumbled another 1,000 points, or 4.1%. The swings are being driven by worries about inflation and interest rates in the aftermath of a market abnormally dependent on low interest rates and high priced riskier assets.

It was questioned whether the deals priced in EM on Thursday were the last hurrah for corporates and sovereigns to get their funding needs in for the year, or if the swings were expected to settle down and EM poised to weather the storm.

“It will be interesting to see if we have a weak year as a whole for issuance after a very strong start, or if it goes down to medium volume,” a market source said.

“Even if everything doesn’t get done [immediately], if you compare it to 2013 and 2014, and you still see these spreads, they are still tight,” the source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.