Emerging markets end week softer; Turkey, Israel price; Independencia plans five-year notes

By Christine Van Dusen

Atlanta, March 12 - It was a buyer's market on Friday as supply exceeded demand in emerging markets bonds and investors judiciously parted with their built up cash, market sources said.

Calling the day's market "a little bit softer," an emerging markets strategist said that investors nonetheless were continuing to view the asset class favorably following an EPFR Global report that in-flows into the bond funds hit a record $1.05 billion for the week ending March 10.

"That was pretty positive," the strategist said. "It's hard to see what's going to derail us."

Also contributing to the positive tone: investors continue to take solace in the fact that Greece's financial troubles have calmed, a West Coast-based market source said.

"That has calmed investor fears for the time being," he said. "So that's making it a little bit easier for people to put risk back on."

Much of the day's activity was "flow-driven," the source said. "It seems as though the flows of the last month have really picked up and so we're seeing things being tighter. Spreads have come in."

In trading on Thursday, Israel's new issue of €1.5 billion 4.625% notes due 2020 was up about ¾ of a point by mid-afternoon in New York. The deal had priced Thursday at 99.553 to yield 4.682% or mid-swaps plus 130 basis points

Another sovereign that came to market on Thursday the same day got an iffy reception.

Turkey priced $1 billion of 5.625% notes due 2021 at 98.986 to yield 5.75% or Treasuries plus 202.7 basis points.

That pricing may have been a bit too aggressive, a market source said.

"Perhaps the market wanted a little more juice than that. That's why it's down today by almost 2 points. Maybe it was a little too tight," he said. "It's wider by about 13 basis points. They didn't give it enough juice for it to fly after launch."

Meanwhile Brazilian beef producer Independencia Alimentos SA is lining up a $150 million issue of senior secured notes due in 2015, according to a market source.

Israel prices notes

Terms emerged on two sovereign issues.

The State of Israel priced €1.5 billion 4.625% notes (A1/A/A) due 2020 at 99.553 to yield 4.682% or mid-swaps plus 130 basis points, according to a market source.

Barclays Capital, Goldman Sachs International and Morgan Stanley were the bookrunners for the Regulation S deal.

Turkey prices notes

Turkey priced $1 billion of 5.625% notes due March 30, 2021 (Ba2/BB/BB+) at 98.986 to yield 5.75% or Treasuries plus 202.7 basis points, according to a market source.

Banc of America Securities, Barclays Capital and RBS were the bookrunners for the Securities and Exchange Commission-registered deal.

Proceeds will be used for general financing purposes.

Independencia plans notes

Brazil's Independencia Alimentos plans to issue about $150 million senior secured notes (expected Caa1//) due in 2015, according to a market source.

Proceeds will be used for general corporate purposes, working capital, payments to suppliers and transaction fees and expenses.

Independencia Alimentos is a beef producer based in Cajamar, Sao Paulo.

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