Windfall in LatAm deals continues as market eyes year-end; Growthpoint pulls euro deal

By Rebecca Melvin

New York, Dec. 6 – Emerging primary markets saw a windfall of mostly Argentine and Brazilian issues on Wednesday as the prospect of higher interest rates in 2018 creates a rush to get things done ahead of the new year, a New York-based market source said.

“It’s to be expected, people are trying as much as possible to price things now. The re-taps are simple – the documentation is there, and they are not doubling deal size or anything. They are using proceeds to refinance existing credit,” the source said.

Argentina-based oil and gas company Yacimientos Petroliferos Fiscales SA announced one of these types of deals, with the company looking to price an add on to its existing 6.95% notes due 2027 as well as a new issue of 30-year bonds on Thursday.

YPF priced the original $750 million of the 2027 notes in July.

Also from Argentina, the province of La Rioja priced a $100 million add-on to its 9¾% green bonds due Feb. 24, 2025 (//BB-) on Wednesday at a price of 110 to yield 7.539%. The original Provincial bond priced in February for $200 million.

La Rioja’s existing notes traded down to 109.915 from a close of 110.228 on Tuesday on the Luxembourg Stock Exchange.

La Rioja province is located in the northwestern Argentina.

Also on Wednesday, Sao Paulo, Brazil-based airline, GOL Linhas Aereas Inteligentes SA, priced $500 million of 7% seven-year notes for a yield of 7¼%, a market source said.

On Tuesday, Minerva Luxembourg SA priced $500 million of 5 7/8% 10-year senior notes to yield 6 1/8%. The notes are guaranteed by Brazilian food processor Minerva SA.

The deals are generally pricing at the tight end of guidance that is revised lower from initial talk, representing terms that are favorable for issuers.

Emerging markets were fairly quiet early Wednesday even as U.S. Treasuries continued to be bid higher and as global stock markets stumbled.

Spreads were stable, a London-based market source said.

In the Middle East regions, spreads on Islamic Development Bank notes were slightly wider after a tightening in over the past week. The bank’s nearest dated 1.535% notes due 2018 were wider by 5.4 bps on the day, compared to 12.5 bps of tightening over the past week.

The primary market for the Central & Eastern Europe Middle East and Africa region was notably quiet, which has generally been the case this week, according to one source. And South Africa’s Growthpoint Properties Ltd. pulled a planned deal of euro-denominated five-year notes.

The Growthpoint Properties move was viewed as reflective of circumstances internal to South Africa rather than a signal that the emerging capital markets are struggling, a source said.

Based in Gauteng, South Africa, Growthpoint has investments in retail, office and industrial properties

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