EM ‘pretty stable’; Poland, Credit Bank of Moscow prep deals; Gol Linhas prices add-on

By Rebecca Melvin

New York, Jan. 30 – Emerging market credit was relatively stable on Tuesday in terms of both pricing and spreads, and the new issue market remained open, despite a drop in U.S. Treasuries and stocks, a London-based market source said.

U.S. Treasuries sold off again on Tuesday as investors eye the potential for higher growth and rising inflation. The yield on the 10-year benchmark settled at 2.725%, which was up from 2.695% on Monday, and representing the eighth increase over the past 10 trading days.

Among U.S. stock indexes, the Dow Jones industrial average sold off as much as 411 points on Tuesday and closed down for a second consecutive day. The S&P 500 stock index and Nasdaq also posted back-to-back losses, but there were mixed reactions to the significance of the pullback as some view strong earnings and higher growth as an ongoing engine for stocks.

The volatility in the broader markets has “not yet affected emerging markets. Credit spreads are pretty stable. The market is pretty strong,” a market source said.

Meanwhile dollar prices were holding firm and the new issue market was still open for business, the source said.

There was more trading activity particularly for Turkey and the central European region, with appetite for Turkey issuance remaining unabated for the year so far. “There have been a number of sovereign and corporate issues and all have done very well and are performing okay in the secondary. We expect this to go on,” a market source said.

The new issue calendar grew as Poland announced a deal of 8˝-year euro-denominated green bonds of benchmark size, and Credit Bank of Moscow mandated banks and scheduled a roadshow for a dollar-denominated offering of five-year notes.

For Poland’s Regulation S note, the sovereign has mandated BNP Paribas, Citigroup, Commerzbank, Societe Generale CIB and PKO BP to lead manage the deal under the issuer’s medium-term note program.

For Credit Bank of Moscow’s Rule 144A and Regulation S offering, global coordinators are Credit Suisse, JPMorgan and Societe Generale, with ING as a joint bookrunner. Meetings with fixed-income investors will begin on Thursday and wrap up on Tuesday.

The bank is privately owned and operates in Moscow and the Moscow region. according to a market source.

Dubai Islamic Bank PJSC launched $1 billion of five-year Islamic bonds to yield mid-swaps plus 115 basis points on Tuesday, but final terms were not available by Prospect News’ deadline.

The launch pricing was revised down from guidance of around 130 bps over midswap and initial talk of 155 bps over, a source said.

The deal had a very small new issue premium.

Also new to the market, Export Import Bank of India priced $1 billion 3 7/8% 10-year notes (Baa2//BBB-) at 99.819 of par to yield 3.897%. The deal settles on Feb. 1.

Barclays, Citigroup, JPMorgan, MUFG and Standard Chartered Bank were bookrunners for the Rule 144A and Regulation S issue, which attracted an order book of more than $1.8 billion.

Of the notes, 60% were distributed in the United States, 22% were distributed in Asia, and 18% were distributed in Europe.

The new notes were issued under the bank’s $10 billion global medium-term note program and will be listed on the London Stock Exchange International Securities Market.

Proceeds will be used to support Indian exporter projects.

The financial institution is based in Mumbai.

In Latin America, Brazil’s GOL Linhas Aereas Inteligentes SA priced a $150 million add-on to its existing 7% notes due 2025 at 99.967 for a yield of 7%.

The new notes lifts that deal size to $650 million. The initial $500 million of 7% notes priced in Dec. 6.

The airline is based in Sao Paulo.

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