Indonesia launches $2.5 billion notes; Evraz talks dollar notes; Brazil plans real notes

By Paul A. Harris

Portland, Ore., April 17 - Emerging markets debt traded with a stronger tone in Europe and the United States on Tuesday, sources said.

The appetite for risk improved in Europe, according to a trader who spotted the Markit iTraxx Crossover index - the so-called "fear" index - 21 basis points tighter on the day, at 660 bps bid, 663 bps offered.

Most single-name credit default swaps were tighter with the lone exception of Hungary, whose five-year CDS were three bps wider on the day at 573 bid, 583 offered, the trader said.

VTB Capital SA's recently priced 6% notes due 2017 traded at 100.88 bid, 100.98 offered on Tuesday. The $1.5 billion deal priced at par on April 4.

In the primary market Republic of Indonesia launched $2.5 billion of notes in two tranches, Evraz Group SA talked its dollar-denominated offering of five-year notes with a yield in the 7¾% area, and Federative Republic of Brazil announced an issue of 12-year real-denominated notes that will be payable in dollars.

Indonesia notes

Indonesia (Baa3/BB+/BBB-) launched a $2.5 billion two-part offering of notes on Tuesday.

The deal is comprised of a $2 billion new issue of 10-year notes launched with a yield of 3.85% and a $500 million add-on to the 5¼% notes due Jan. 17, 2042, which launched at 104.636 to yield 4.95%.

Initial yield guidance on the 10-year bonds was 4 1/8%. The add-on came with initial yield talk of 4.98%.

JPMorgan and Standard Chartered Bank are the bookrunners. J.P. Morgan will bill and deliver.

The original $1.75 billion issue of 5¼% notes due 2042 priced at 98.148 to yield 5 3/8% on Jan. 9.

Indonesia Eximbank roadshow

Indonesia Eximbank (Baa3/BBB-) began a roadshow on Tuesday for an expected dollar-denominated fixed-income debt offer.

The Regulation S only deal will be presented to investors in Asia and Europe.

HSBC, Mitsubishi and Standard Chartered Bank are the leads.

The prospective issuer is a financial institution which is 100% owned by the Republic of Indonesia.

Evraz price talk

Russia's Evraz Group (Ba3/B+/BB-) set price talk for its dollar-denominated offering of five-year notes with a yield in the 7¾% area.

As reported, Citigroup, JPMorgan and Troika Dialog are the arrangers.

Evraz is a Moscow-based steel producer.

Brazil real deal

In the Latin American sphere Brazil announced plans to issue real-denominated notes due 2024.

The notes will be payable in dollars.

Goldman Sachs and HSBC are managing the sale.

Brazil said it will use the proceeds for general purposes, including refinancing its domestic and external debt.

Argentina CDS spreads

News that Argentina seized oil group YPF, its biggest oil company, displacing Spanish group Repsol as majority shareholder, sent Argentine CDS spreads to their wides for the year, sources said.

Argentina five-year CDS were seen as high as 959 bps bid, a market source said, noting that the "YPF nationalization" news aggravates Argentina's already constricted access to the financial markets.

YPF's debt load and cost of capital will likely go up, but the market has likely already priced in the bad news, the source added.

A bill now before the Argentine legislature would put 51% of YPF in state hands.

© 2015 Prospect News.
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