New Paraguay trades well; market a touch stronger after U.S. payrolls; Peru LNG, Unigel, MHP ahead

By Rebecca Melvin

New York, March 9 – The new Republic of Paraguay bonds were trading okay on Friday at about 100.5, supported by weaker U.S. Treasuries, a New York-based buysider said.

“Any good quality EM bond, generally speaking, that is well placed should do well in this environment,” the buysider said.

On Thursday Paraguay priced $530 million of 5.6% notes due 2048, tight compared to guidance that was set in the high 5% area.

“Paraguay priced a very good deal, which was announced as $500 million but ended at $530 million with zero to five basis points of new issue concession depending on where you spot the curve,” said a New York-based syndicate source away from the deal.

The successful deal shows that appetite remains for emerging markets duration and that fundamentals are strong, the syndicate source said.

“It’s going to be a matter of the right window of execution,” the source said.

Overall, the emerging markets primary remained active this past week, with a decent calendar growing for next week, while the secondary market was described as under a bit of pressure but was going out flat to slightly better on Friday.

U.S. Treasuries weakened on Friday on the back of February’s strong U.S. jobs data. The rate went back up to right around 2.9% for the benchmark 10-year Treasury.

Nonfarm payrolls rose by an especially large, seasonally adjusted 313,000 jobs last month, well above the average monthly gain. The unemployment rate held steady at 4.1%, a 17-year low. The data is supportive of the narrative that inflation is set to rise and that gradual rate increases to the Federal Reserve’s target Fed funds rate are merited.

Looking ahead to next week, deals on the calendar for Peru LNG SRL and Unigel Participações SA are expected to be able to be completed.

Unigel is a weaker credit compared to LNG and Paraguay, but it should be able to price, the syndicate source said.

The market was feeling soft most of week, but was a tad bit better on Friday, the source said. “Rates are closing wider on the back of strong payrolls data, but I think this is all positive.”

Peru LNG SRL eyes notes

Lima-based liquid natural gas plant operator Peru LNG Quality is planning to price a $940 million senior bond issuance due 2030 (expected ratings: Baa3/BBB-/BBB-), according to market sources.

BofA Merrill Lynch, Citigroup, Credicorp Capital and JPMorgan are arranging fixed-income investor meetings and will be joint bookrunners of the planned Rule 144A and Regulation S offering.

Proceeds will be used together with bank debt to refinance about $1.2 billion of existing debt.

Unigel on deck

Brazilian-based commodity chemical producer Unigel plans to price a deal of seven-year notes following roadshow meetings set to wrap up March 14.

The company has selected Morgan Stanley and UBS as joint bookrunners to arrange the meetings.

The deal is being priced via Unigel subsidiary Unigel Luxembourg SA and guaranteed by Unigel Participações, Acrilonitrila do Nordeste SA, Companhia Brasileira de Estireno, Proquigel Química SA and Plastiglas de Mexico SA.

Proceeds will be used to repay short-term debt and for general corporate purposes.

MHP to price, tender

Via a subsidiary, Ukraine’s agro-industrial MHP SE group has mandated banks and scheduled fixed-income investor meetings for a new dollar-denominated eurobond with a tenor of eight to 10 years, according to market sources.

J.P. Morgan, ING and UBS are organizing the meetings starting March 14.

At the same time, the company is tendering for any and all of its $495.6 million of 8¼% notes due 2020. The tender price for bonds tendered by March 21 is $1, 095 per $1,000 held.

The tender is contingent on a new issue of at least $247.8 million in size, or half of the amount of existing notes being tendered.

The issuer is based in Kiev, Ukraine.

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