Emerging markets activity slows; Vale prices; BESI sets guidance; Mexico plans new bonds

By Christine Van Dusen

Atlanta, March 17 - Emerging markets activity remained somewhat slow on Wednesday as bankers for Latin America went on "spring break" and investors and issuers considered whether the Federal Open Market Committee will stick with its promise of maintaining low interest rates when they meet again next month, market sources said.

Most market-watchers seem to think the FOMC will keep rates low. But the bankers? They're too busy packing up their swimsuits and sunscreen to worry too much about that, a New York-based investment source said.

"The bankers are going on spring break," he said, jokingly referring to the Inter-American Development Bank's annual meeting that begins Thursday in Cancun, Mexico.

"The market is going to be very quiet until after the IDB meetings," he said. "Things are very, very quiet today while they pack their bags."

Still, some Latin American issuers did manage to make some headway on Wednesday. The deal from Banco Bradesco - the Brazilian banking company that on Tuesday priced $750 million 4.1% senior notes due 2015 at 99.996 to yield Treasuries plus 175 basis points - was up Wednesday by about "2 or 3 bps," a source said. "It got a great reception. It's performing very well."

Also on Wednesday, Brazil-based Vale SA priced its €750 million offering of 4 3/8% notes due 2018 at 99.564 to yield 4.441%, or mid-swaps plus 140 bps, according to a company statement. The metals and mining company had revised spread guidance to mid-swaps plus 140 bps from mid-swaps plus 140 bps to 150 bps.

Another Brazilian issuer, BES Investimento do Brazil SA, set guidance for its planned issue of five-year notes at 6% to 6 1/8%, according to a market source. That deal is expected to price this week.

Mexico offering emerges

And Mexico announced plans for an issue of 4% inflation-linked bonds due Nov. 15, 2040, according to a presentation from the Secretaria de Hacienda's Public Credit Office. This came as the International Monetary Fund revised its projection for Mexico's economic growth from 3.1% to 4%, a decline from 2009's 6.5% but still possibly a sign of a turnaround.

A conference call to discuss Mexico's bond offering took place on Tuesday. Pre-book building is now underway.

Latin American five-year credit-default swaps also tightened on Wednesday, nearing the European close.

Brazil's five-year CDS finished the day at 116 bps mid, 3 bps tighter. Mexico closed at 107 bps mid, 2 bps tighter. Argentina ended the day at 992 bps mid, 10 bps tighter. And Venezuela closed at 902 bps mid, 5 bps tighter.

Meanwhile, Gazprom's five-year CDS finished Wednesday at 192 bps mid, 1 bp wider. And Russia closed at 133 bps mid, unchanged.

Overall, emerging markets were "very strong," a London-based source said.

A New York-based trader called them "very, very firm. They're extremely firm," he said. "Sovereigns are up about a point and a half. Indonesia's up another half a point. Everyone needs to put money to use. It's the same old story."

Vale prices notes

Brazil's Vale priced €750 million 4 3/8% notes (Baa2/BB+/BBB) due 2018 at 99.564 to yield 4.441%, or mid-swaps plus 140 bps, according to a company announcement.

The bookrunners for the U.S. Securities and Exchange Commission-registered deal were BNP Paribas, Credit Agricole CIB, HSBC and Banco Santander.

Proceeds will be used for general corporate purposes.

Vale is a Rio de Janeiro-based metals and mining company.

BESI sets guidance

Brazil's BES Investimento do Brazil (Baa2/BBB-/) set price guidance for its planned issue of five-year notes at 6% to 6 1/8%, according to a market source.

Deutsche Bank, ES Investment and Standard Bank are the bookrunners for the Rule 144A and Regulation S deal, which includes a change-of-control put at 101% if BESI Portugal ceases to control BESI Brasil.

BESI is a banking company based in Sao Paulo.

Paul A. Harris contributed to this report

© 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.