Femsa, Icici price; session strong but quiet for emerging markets; Gazprom, Sappi on deck

By Christine Van Dusen

Atlanta, March 14 – Mexico’s Fomento Economico Mexicano SAB de CV (Femsa) and India’s Icici Bank Ltd. sold notes on Monday as a strong tone persisted for emerging markets assets.

“Buoyed by further ECB easing and deposit rate cuts from last week, EM credit continues to perform well,” a strategist said. “This week remains dominated by central bank meetings.”

Among them is the Wednesday meeting of the Federal Reserve.

“With regard to the Fed, futures currently price in a probability of only 4%, although investors will look out for any indications on the timing of a future rate hike,” he said.

In trading, Latin American bonds were quiet but strong, a New York-based trader said.

“Accounts salivate for a thicker pipeline, with lack of secondary inventory,” he said.

High-grade names from Mexico moved higher on very little volume, he said, with banks moving higher.

Investors were chasing paper from Brazil-based Gerdau SA.

“They are higher yet again today,” he said. “The 2021, 2023 and 2024 are up approximately 14 points during the last month. The 2044s are up 18-ish.”

Buyers, for the most part, outnumbered sellers, another trader said.

“We are off the tights from Friday as the Street starts to accumulate short positions and hedges after the big move tighter in risk, although action in credit default swaps was limited on this move wider and selling is very limited,” he said. “But it’s a quiet Monday, so not a day to read into too much.”

Egypt, Pakistan tighten

From the Middle East, Egypt's curve was 20 bps to 25 bps tighter, another trader said.

“The Pakistan curve is another 10 bps tighter,” he said. “In sovereign curves we are finding front-end bonds super well-bid and curves are steepening, which may be a sign that accounts are cutting risk and duration.”

After a bomb attack in Ankara that killed 37 people, bonds from Turkey “tried to move us wider,” he said. “But it didn't last, as the Street was looking to close shorts from last week’s flows.”

Global picture still volatile

Taking a look at the oil market, there are doubts that a production freeze can be reached in the near term, the strategist said.

Meanwhile, “Syria peace talks are expected to become substantive this week,” he said. “The ‘cessation of hostilities’ brokered by Russia and the U.S. has reduced fighting and violence in most parts of the countries, although some violations are reported by both sides.”

Still, “the trench between the Syrian regime under Assad and the opposition remains wide,” he said. “There is certainly a risk that both sides will go back to war if no results can be yielded, with several opposition groups voicing that they would be ready to continue fighting.”

Femsa prices notes

In its new deal, Mexico’s Femsa priced €1 billion 1¾% seven-year notes at 99.517 to yield mid-swaps plus 155 bps, a market source said.

The notes were talked at a spread in the 160 bps area.

BBVA, Credit Suisse and Deutsche Bank were the bookrunners for the Regulation S deal.

The proceeds will be used for general corporate purposes.

Femsa is a Monterrey-based Coca-Cola bottler.

Icici sells bonds

Also on Monday, India’s Icici Bank, through its Dubai branch, priced $700 million 4% notes due 2026 at 99.592, according to a company announcement.

BofA Merrill Lynch, Barclays, Citigroup and HSBC were the bookrunners for the Rule 144A and Regulation S deal, a market source said.

Gazprom on roadshow

Russia’s Gazprom OJSC set out on Monday for a roadshow to market a Swiss franc-denominated offering of notes, a market source said.

Deutsche Bank, Gazprombank, Renaissance Capital and UBS are the bookrunners for the deal.

The roadshow is being held in Geneva and will conclude on Tuesday.

Gazprom is a Moscow-based natural gas producer.

Sappi sets marketing trip

Sappi Ltd. plans to market a €350 million offering of seven-year senior secured notes on Tuesday and Wednesday, according to market sources.

Global coordinator Citigroup will bill and deliver for the Rule 144A and Regulation S offering. Credit Agricole CIB and JPMorgan are also global coordinators. Erste, KBC, Royal Bank of Scotland, Standard Chartered Bank and UniCredit are joint bookrunners.

The Johannesburg, South Africa-based coated paper manufacturer plans to use the proceeds to refinance $350 million of 6 5/8% notes due April 2021.

Paul A. Harris contributed to this article

© 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.