New Seplat Petroleum trades up a point from reoffer; new Itau Unibanco trades flat

By Rebecca Melvin

New York, March 13 – Seplat Petroleum Development Co. plc’s newly priced 9¼% notes traded up about a point on Tuesday after the Nigerian oil and gas E&P company priced $350 million of the five-year notes at a reoffered 99.013, taking initial yield up to 9½%, a London-based trader said.

The Seplat notes were quoted 99.75 bid, 100.25 offered at the end of London’s session.

The notes, which are non-callable for two years, were oversubscribed by about two times. The bond represents the company’s first foray into the international debt markets and the first cross-border bond for an African corporate issuer this year.

Meanwhile the rest of the CEE/MEA region was fairly busy, with deals continuing to be announced and priced. Turkey’s Yapi ve Kredi Bankasi AS priced $500 million of five-year bonds at par to yield 6.1%. That pricing was tightened from initial talk in the 6¼% area.

U.S. Treasuries rose on Tuesday on the back of tame U.S. consumer price data, pointing to continuing modest inflation. The data alleviated some anxiety provoked by last month’s pickup in inflation, which pressured Treasuries and sent yields up to near 3% for the benchmark 10-year note. Treasuries tend to strengthen on disappointing economic data, as an economy growing too fast can spur inflation and curb fixed returns of government bonds.

Itau Unibanco returns

Also among new issues was Brazil’s Itau Unibanco Holding SA, which priced its second tier one perpetual transaction in three months. The Brazilian lender priced $750 million of the 6½% subordinated notes at par on Monday, and those notes traded right around issue price on Tuesday.

In December, Itau Unibanco priced $1.25 billion of perpetual notes to yield 6¼%. Both issues had been talked in the mid 6% area.

“People were frustrated with it coming back so soon, but what can you do with Treasuries widening out 50 basis points. The bonds were trading around par, where they came, so they really did OK,” a New York-based market source said.

Brazil corporates eyed

The rest of the Brazilian corporate and sovereign universe was trading about in line with the rest of EM on Tuesday, which was a little wider with the move in Treasuries.

Two weeks ago, several Brazilian corporates were downgraded by Fitch Ratings on the heels its downgrade of the sovereign issuer to BB- from BB. The downgrades didn’t really affect the market, however.

“[It] hasn’t done any worse. The bonds traded up on the day of the downgrade, broader market was up and brazil went up with it.

“It wasn’t considered new news. The broader market was up and Brazil went up with it,” a market source said. In the interim, Brazil has traded pretty much in line with the rest of the Latin America universe, the source said.

Petroleo Brasileiro SA and Petrobras Global Finance BV were among the corporate credits downgraded by Fitch, cut to BB- from BB.

On Tuesday, Petrobras’ 5¾% notes due 2029 were down about a point on the day to 95.95, according to Trace data.

Petrobras’ 6.85% notes due 2115 also slipped a little less than a point to about 94.7 from 95.5.

In terms of new issuance for Latin America, a deal for Unigel Participacoes SA is expected to price on Thursday after a roadshow wraps up on Wednesday. The Brazilian-based chemical producer is expected to price an offering of seven-year notes, using proceeds to repay short-term debt and for general corporate purposes.

Also on the calendar is a deal for Peru LNG SRL. The Lima-based gas-fired power company was expected to use proceeds together with bank debt to refinance $1.2 billion of existing debt.

Elsewhere, Chengdu Xingcheng Investment Group Co. Ltd. joined the calendar with a plan to price two tranches of euro-denominated notes. The proceeds will be used for project construction and credit repayment.

And Dar Al Arkan Real Estate Development Co. was talking a $300 million five-year Sukuk offering to yield in the area of 7½%, according to a market source on Tuesday.

Goldman Sachs International, Deutsche Bank, Dubai Islamic Bank, Alkhair Capital, Emirates NBD, Nomura, Noor Bank and Standard Chartered are bookrunners for the deal, which was expected to price later Tuesday.

The consumer-price index increased 0.2% in February after rising 0.5% in January, the Labor Department said Tuesday. Core inflation, excluding the volatile food and energy categories, slowed to a rate of 0.182% in February from 0.349% in January.

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