Emerging markets weaker; Colombia, Mexico price; Credito Real and Itau Unibanco set talk

By Christine Van Dusen

Atlanta, April 7 - Emerging markets were slightly weaker but still outperformed overall on Wednesday as risk aversion rose, action was fairly slow in the primary and secondary, and several Latin American issuers made news, market sources said.

"It's been a weird day," a West Coast-based market source said. "We're kind of ending the day weaker. That's the general tone today. Treasuries are rallying hard in the U.S., the market is lower, spreads are wider. We're seeing more risk aversion here, especially in the latter part of the day."

A New York-based market source agreed that the market was a "touch weaker" but said "emerging markets are kind of outperforming the rest of the market."

For the day, the secondary side was "pretty quiet," the New York source said. "We haven't seen much in the way of movement."

Could the same be said for the primary side? It, too, was "relatively quiet" on Wednesday, he said. "But we're hearing there's a pipeline building. The calendar is starting to build."

Colombia, Mexico price

Kicking off the forward momentum was the Republic of Colombia, which on Wednesday priced a Ps. 1.53 trillion, or $792 million equivalent, issue of 7¾% global TES bonds due 2021 at par, an informed market source said.

The deal, according to the West Coast source, "was a very oversubscribed kind of thing."

Also pricing on Wednesday was Mexico's $1 billion reopening of its 6.05% notes due 2040. The deal came to market at 97.724 to yield 6.218%, or Treasuries plus 137.5 basis points, according to a filing with the Securities and Exchange Commission.

The day also saw Chinese property developer Country Garden Holdings Co. Ltd set up a roadshow for a benchmark-sized offering of dollar-denominated senior notes due 2017. The marketing trip will start Friday and travel through Asia and Europe before wrapping up the week of April 12.

Two issuers set talk

Also on Wednesday, Mexico's Credito Real SA de CV Sofom set price guidance for a planned $150 million issue of five-year notes at the 10¼% area, according to an informed market source. The deal got a BB- rating from Standard & Poor's, due in part to the issuer's "high dependence on volatile funding sources, primarily market debt, somewhat increasing its refinancing risk," said S&P credit analyst Alfonso J. Novelo in a written statement.

As of Wednesday afternoon the deal was "going well as investors continue to have an appetite for yield and are willing to step down the rating spectrum," the informed source said.

Most market-watchers expected Wednesday would also include the pricing of Brazil-based Itau Unibanco's planned 10-year tier 2 notes via Goldman Sachs, Itau and Morgan Stanley. But as of the New York close, "it did not price," a market source said. The company instead announced price talk of Treasuries plus 250 bps.

Mexico prices notes

Mexico priced a $1 billion reopening of its 6.05% notes due Jan. 11, 2040 (Baa1/BBB/BBB) at 97.724 to yield 6.218%, or Treasuries plus 137.5 bps, according to a filing with the Securities and Exchange Commission.

The issue was upsized from $500 million, sources said.

Credit Suisse and Goldman Sachs were the bookrunners for the SEC-registered deal, which priced in line with talk and includes a make-whole call at Treasuries plus 30 bps.

Colombia prices peso deal

Colombia priced a Ps. 1.53 trillion issue of 7¾% global TES bonds due April 14, 2021 (expected Ba1/BB+/BB+) at par, according to an informed source.

Credit Suisse and Deutsche Bank were the bookrunners for the SEC-registered deal.

The bonds will pay principal and interest in U.S. dollars.

Proceeds will be used for general budgetary purposes.

Country Garden sets roadshow

Country Garden Holdings will hold a roadshow for a benchmark offering of dollar-denominated seven-year senior notes (Ba3/BB-) in Asia and Europe beginning on Friday, according to a market source.

The roadshow wraps up during the middle part of the April 12 week.

Goldman Sachs & Co. and JPMorgan are joint bookrunners.

Proceeds will be used to refinance the Hong Kong-based company's outstanding convertibles.

Credito Real talks notes

Mexico's Credito Real set price guidance for a planned issue of $150 million five-year notes (/BB-/) at the 10¼% area, according to a market source.

Bank of America Merrill Lynch is a bookrunner for the deal.

Credito Real is a consumer financing company based in Del. Miguel Hidalgo, Mexico.

Itau Unibanco sets guidance

Brazil's Itau Unibanco set price guidance for its planned issue of 10-year tier 2 notes at Treasuries plus 250 bps, according to a market source.

A roadshow started Monday via bookrunners Goldman Sachs, Itau and Morgan Stanley.

Itau Unibanco is a banking company based in Sao Paulo.

Paul A. Harris contributed to this report

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