Mexico prices $1 billion tap of 2020s; Bank of Moscow notes play to $2.5 billion of orders

By Paul A. Harris

St. Louis, March 4 - Emerging markets debt rallied substantially heading into the New York afternoon, according to a syndicate banker there.

The JPMorgan Emerging Markets Bond Index, the EMBI-Plus, went out at a spread of 283 basis points, 3 bps tighter on the day.

Earlier, at the European close, there were better sellers in Russian corporate paper, according to a trader there.

The market was trading in line with early weakness in U.S. equities and ahead of a substantial amount of new issue supply in the Russian corporate space, the trader added. However emerging markets were solid through most of the European session.

Earlier in the European afternoon, Brazil's five-year CDS were 126 bps mid, 2 bps tighter on the day, according to a market source.

Mexico's five-year CDS were 120 bps mid, also 2 bps tighter.

Russia's five-year CDS were 161 bps mid, 4 bps tighter.

Mexico taps 2020 notes

In the primary market, United Mexican States priced a $1 billion add-on to its 5 1/8% global bonds due Jan. 15, 2020 (Baa1/BBB/BBB) at a 139 bps spread to Treasuries.

The bond offering was launched at Treasuries plus 139 bps earlier in the day.

JPMorgan and Morgan Stanley were the joint bookrunners.

The original $1 billion issue priced at 99.037 to yield 5¼% on Jan. 11.

Bank of Moscow plays to $2.5 billion book

Elsewhere, Bank of Moscow priced a $750 million issue of five-year senior unsecured notes (Baa1//BBB-) at a 415 bps spread to mid-swaps on Thursday.

That spread came tight to the mid-swaps plus 425 bps price talk.

Credit Suisse, Goldman Sachs & Co. and JPMorgan led the deal.

Bank of Moscow played to a book that totaled $2.5 billion of orders, the source said.

By mid-morning, slightly after official talk surfaced, a trader said that pricing on the deal had tightened to mid-swaps plus 415 bps to 425 bps from the 425 bps area.

Any accounts that may have been hoping for a pricing concession from Bank of Moscow, based on an initially poor performance from JSC VTB Capital's new 6.465% loan participation notes due 2015 (Baa1/BBB/BBB), which priced last week, were out of luck, the trader said.

Those notes were trading par bid, par 1/8 offered, above issue price, on Thursday morning, the trader added.

Earlier in the week they were reported as low as 99¾ bid, 99.90 offered by a Zurich-based trader who contended that the deal had been poorly priced.

"However VTB is back, now," Thursday's trader said. "People can now argue that it was correctly priced."

Hence, there was no concession from Bank of Moscow based on VTB's secondary performance.

Alliance Oil tight to talk

Meanwhile, Moscow-based Alliance Oil Co. Ltd. priced a $350 million issue of five-year senior unsecured notes (/B+/B) at par to yield 9 7/8%.

The yield printed at the tight end of the 10% area price talk.

BNP Paribas, Credit Suisse and JPMorgan were the joint bookrunners.

Proceeds will be used to refinance debt and for general corporate purposes.

The offering was initially marketed during middle- and late February but was postponed a week ago due to market conditions.

As a measure of how substantially emerging markets have rallied over the course of that week, at the time the Alliance Oil deal was postponed, investors were pushing for a rate as high as 11%, according to a sellside source.

Philippines' ICTSI taps banks

Finally, the Philippines' International Container Terminal Services, Inc. mandated HSBC and JPMorgan to lead a dollar-denominated offering of 10-year notes, according to a market source.

The notes will be marketed on a roadshow that will feature investor meetings in Manila, Hong Kong and Singapore.

Pricing is subject to market conditions.

© 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.