Metalloinvest notes rise; Indian Oil sets roadshow start; Celulosa Argentina pulls deal

By Paul A. Harris

Portland, Ore., July 15 - Emerging markets finished the New York session basically unchanged in thin trading on Friday, sources said.

The EMBI Global index was 293 basis points bid, also unchanged, heading into the mid-afternoon.

"High-yield bonds are down about 0.1%, while high grades are about 1/8% higher," said an emerging markets analyst based on the East Coast of the United States.

Metalloinvest Finance Ltd.'s freshly minted 6½% notes due 2016 (Ba3//BB-), which priced late Thursday at par in a $750 million issue, were par 3/8 offered on Friday afternoon.

Indian Oil Corp. announced roadshow plans for its benchmark-sized dollar-denominated offering of 10-year notes (Baa3//BBB-).

However, Celulosa Argentina SA postponed its $150 million offering of seven-year notes subsequent to hiking price talk to 11% from earlier guidance of 10% to 10¼%.

Metalloinvest trades higher

The new five-year par-pricing 6½% senior notes from Russia's Metalloinvest were par 3/8 bid on Friday afternoon, according to a sellside source.

Although they were still trading at a premium to the issue price, the notes were off of earlier levels of 100½ bid, 100 5/8 offered, according to a hedge fund manager.

The Moscow-based mining and metallurgy company priced $750 million of those notes (Ba3//BB-) late Thursday.

The yield printed at the tight end of the 6½% to 6 5/8% price talk.

Credit Suisse, JPMorgan and VTB Capital were the global coordinators.

BNP Paribas, Bank of America Merrill Lynch, Credit Suisse, ING, JPMorgan, Royal Bank of Scotland, SG CIB, Troika Dialog and VTB were the joint bookrunners.

Quiet week in the primary

Metalloinvest was the only EM high-grade deal to cross the finish line during the volatile week of July 11, which saw Korea South-East Power Ltd. (Kosep) abandon a $300 million offering on Wednesday.

Metalloinvest played to $2.75 billion of demand, according to a trader.

That came as no surprise to the analyst who spoke to Prospect News on Friday.

"Investors are presently flush with cash, so there is reluctant buying taken place," said the analyst who agreed to speak on background.

Global emerging markets debt funds saw $872 million of inflows for the week to Wednesday, according to a weekly report from EPFR Global.

Given inflows, against the backdrop of thin issuance, the buyside is facing challenges putting cash to work.

"Issuance volume is down quite a bit," the analyst commented.

"We are accustomed to seeing about $14 billion of issuance by the middle of the month, but to the middle of July we've only seen about $7 billion."

Indian Oil Starts Monday

Indian Oil Corp. will begin a brief roadshow on Monday for a benchmark-sized dollar-denominated offering of 10-year notes (Baa3//BBB-).

The roadshow is expected to wrap up on Wednesday.

BNP Paribas, Citigroup and Royal Bank of Scotland are the leads.

The Mumbai, India-based state-owned oil and gas company plans to use the proceeds from the Regulation S deal to fund capital expenditures.

Celulosa Argentina postpones

Finally, Celulosa Argentina SA postponed its $150 million offering of seven-year senior notes (expected ratings B2//B) on Friday.

Talk on the deal shot out to 11%, up from earlier guidance of 10% to 10¼%, sources said.

Although Latin American sovereigns have demonstrated some resilience in the face of the European credit turmoil, high-yield LatAm sovereigns such as Argentina have shown comparatively more susceptibility to the European credit noise, sources said.

"This is definitely a tough market for a single B rated Argentine corporate," a New York-based debt capital markets banker commented on Friday afternoon.

Argentina Celulosa's travails notwithstanding, the Argentina EMBI index tightened by 6 basis points on Friday to finish at 624 bps bid.

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