Emerging market debt scores solid gains; Brazil issues $1.5 billion in notes

By Reshmi Basu and Paul A. Harris

New York, Nov. 7 - Emerging market debt clocked in another solid performance Tuesday, as Brazil placed a $1.5 billion offering of 10-year global notes.

Early Tuesday morning, the Latin American country announced its plans to issue new notes in a drive-by.

The deal was well received, according to Enrique Alvarez, Latin America debt strategist for think tank IDEAglobal.

One market source noted that the new deal showed how "hungry the market is for new paper since it was digested with relative ease."

The dollar-denominated offering comes after a several-month absence for the country. The last time Brazil tapped the international markets with a dollar issue was in March.

Instead the country has been focusing on building up its local curve, noted the market source. Last month, the country reopened its 12½% real-denominated global bonds due 2022 to add R$650 million.

One trader added that it was the "perfect time" for the sovereign to issue, since "the market has been dominated by corporate deals."

In addition to the market environment, the long-running worries over the outcome of the country's recent presidential election are now resolved.

As a result of the additional supply, Brazil's sovereign curve saw a mixed session.

The bellwether bond due 2040 was unchanged at 131.80 bid, 131.86 offered. The 2015 bond was unchanged at 110.75 bid, 111 offered while the bond due 2019 lost 0.30 to 121 bid, 121.20 offered.

Imcopa to issue $100 million

Adding to the pipeline, Imcopa International SA plans to sell $100 million of three-year bullet notes (/B/).

The deal will be structured as guaranteed senior fixed-rate notes. Imcopa Importacao, Exportacao e Industria de Oleos Ltda. will guarantee the issue.

Proceeds will be used to refinance existing indebtedness

ING is the bookrunner for the Regulation S transaction.

Imcopa is a family-owned company based in Parana state and produces non-genetically modified soybeans.

Peru rises on upgrade

In other developments, Peru saw higher prices on the back of the decision by Moody's Investors Service to change its outlook on the nation's credit to positive from stable, citing a reduction in the country's external vulnerabilities.

In trading, the country's bond due 2012 was up one point to 115.50 bid, 116.50 offered while the bond due 2033 gained 0.20 to 127.25 bid, 128.25 offered.

Meanwhile Argentina underperformed the market as its spreads kicked out by 7 basis points, according to an analyst.

Its bonds sold off on confirmation that the new Boden due 2012 would be part of the "Bono del Sur" with Venezuela. The country plans to sell $500 million of local Venezuelan dollar-denominated paper: $300 million of Boden '12s and $200 million of Bodens due 2015.

Overall, the asset class saw a quiet session, supported by firmer U.S. equities, observed the trader.

At session's end, the JP Morgan EMBI global index was up 0.20%. However, the market was unable to keep up the U.S. Treasuries rally as spreads widened by one basis point.

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