Hurricane Sandy cuts trading day short, leaves EM investors cold; Promsvyazbank deal ahead

By Christine Van Dusen

Atlanta, Oct. 29 - Emerging markets trading activity was light during a Monday session shortened by Hurricane Sandy on the East Coast of the United States.

Bond trading in the United States closed at midday amid somewhat negative investor sentiment.

"Investors still unwilling to buy risk after disappointing corporate statistics released last week," according to a report from UFS Investment Co. "Risk appetite remained low in the morning. Most risk assets will demonstrate moderate decline today."

Bonds from the Ukraine were mostly calm, with the 2020s seen at 103.75 bid, 104.75 offered after last week's levels of 104 bid, 105 offered.

Ukraine's 2021s were trading at 104.75 bid, 105.75 offered, versus last week's 105 bid, 106 offered.

From the Middle East, Dubai's 2020 bonds were sighted at 120.62 bid, 121.38 offered while its 2022s were seen at 111.50 bid, 112.50 offered, a trader said.

Dubai Electricity and Water Authority's 2015s were trading at 112.75 bid, 113.50 offered. The company's 2020s were seen at 118.15 bid, 118.60 offered.

Qatar's 2014s were quoted at 106 bid, 106.50 offered, while its 2020s 119.12 bid, 119.62 offered.

Abu Dhabi's International Petroleum Investment Co. saw its 2020s trade at 11.06 bid, 111.81 offered and its 2041s at 137 bid, 138 offered.

The primary market was quiet on Monday, with Russian lender Promsvyazbank and Latin America-focused Southern Copper Corp. readying new deals.

This news followed the Friday pricing of Brazil-based Samarco Mineracao SA's $1 billion 4 1/8% 10-year notes.

Samarco prices bonds

Samarco's new notes are due Nov. 1, 2022 and priced at 99.32 to yield 4.209%, or Treasuries plus 245 basis points.

The notes were talked at the Treasuries plus mid- to high-200 bps area.

Citigroup, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for the expansion of processing, logistics and production facilities and for general corporate purposes.

Samarco is a Belo Horizonte, Brazil-based mining and iron ore company that is joint-owned by Brazil's Vale SA and BHP Billiton plc.

Promsvyazbank opens book

For its upcoming deal, Promsvyazbank opened the order book on Monday.

"The benchmark yield ranges between 10% and 10½% per annum which is, in our view, attractive," according to UFS.

Bank of America Merrill Lynch, HSBC, JPMorgan and Promsvyazbank are the bookrunners for the deal, designed to boost tier 2 capital following the company's postponement of an initial public offering due to weak demand.

"The fair yield on the new issue should total 9.6% to 9.7% per annum," UFS said. "We consider the offered yield guidance attractive and recommend participating in the placement."

Southern Copper plans notes

Phoenix-based Southern Copper revived its plans for an issue of dollar notes due 2022 and 2042, according to a company filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch, Credit Suisse, HSBC and Morgan Stanley are the bookrunners for the notes, which include a make-whole call and a change-of-control put at 101.

Proceeds are to be used for general corporate purposes, including financing of the company's capital program.

Southern Copper is a mining, smelting, refining and exploration company with operations in Peru, Mexico, Argentina, Chile and Ecuador.

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