Emerging markets bounce on European economic news; MCE prices; Argentina could cancel sale

By Christine Van Dusen

Atlanta, May 12 - As Spain announced spending cuts and E.U. officials continued working to contain the economic crisis, emerging markets bounced back again a little bit, calming some investors but leaving others to wonder whether these measures will prove to be enough.

As a result, emerging market issuers remained slow to move back to the bond market with new deals.

"There are not many new issues at the moment," a Europe-based trader said.

However, one deal did price on Wednesday: Hong Kong's MCE Finance Ltd. sold $60 million 10¼% eight-year senior notes at 99.671 to yield 10½%, coming in on top of price talk, a market source said.

And two issuers set price guidance for deals that could price later this week.

Russia's Credit Europe Bank Ltd. set price talk for its planned dollar-denominated three-year eurobonds at 7¾% to 8%, according to an informed market source. And Kazakhstan's JSC National Atomic Co. (Kazatomprom) set price talk for its planned issue of five-year unsecured notes at the 7% area.

"The highlight would be the Kazatomprom five-year," the Europe-based source said.

That issue - unsecured notes that could total $500 million via BNP and JPMorgan - is being talked at "around 7%," he said. "But with these market conditions people are afraid to take positions."

Argentina could cancel bonds

Wednesday also saw the possible delay or cancellation of Argentina's planned $1 billion 8¾% bonds due 2017, which were to be launched as part of the debt-swap plan that has been extended until May 14.

Economy minister Amado Boudou is "going to make a last-minute decision on actually launching the bond," a New York-based market source said. "He's waiting to see if the external climate cools enough and spreads compress enough on the debt side that they may be able to get something off."

But the yield Argentina is seeking isn't realistic, the source said.

"They're looking to do it at a one-digit overall yield, and the way things are they are going to be very hard pressed to get something in the high 9% bracket," he said. "That's not something readily doable."

Trading in Argentina's discount bond didn't react strongly, though, as the news of this possible cancellation was tempered by the slightly better sentiment about Greece and the economic crisis.

The discount bond was trading Wednesday at 721/4, up 2¾ points. "That's a big rise," the New York-based source said. "Last week it was at 70 cents on the dollar, and before that it got worse. It's bounced back."

Other Latin American issuers also weren't phased by Argentina's possible cancellation. Brazil's longer bonds - namely the '24s, '25s and '34s - were all up 2¼ points each, the source said.

"The conclusion is there's going to be ample liquidity on a number of fronts for a long time," he said. "The allocation preference is pretty easy to gauge. You gotta go toward higher yielding instruments and ones with better credit ratings. They're going to receive flows first. Brazil is just pressing back toward prior highs. It's the natural conclusion."

Overall, prices in the secondary were "more or less all a bit weaker than issue price but were worse before," the Europe-based trader said.

Indosat plans roadshow

Also on Wednesday, Indonesia's Indosat, through subsidiary Indosat Palapa Co. BV, prepared to begin a roadshow on Wednesday for a planned issue of dollar-denominated fixed-rate senior notes due 2020.

Citi, DBS Bank Ltd., Deutsche Bank, HSBC and RBS are the bookrunners for the Rule 144A and Regulation S offering. Proceeds will be used to refinance Indosat's $235 million guaranteed notes due in November, along with the company's $109 million guaranteed notes due 2012, according to Moody's Investors Service.

The deal "is expected to be launched in the near future subject to market conditions," the corporate announcement said.

Indosat is a telecommunications and information service provider based in Jakarta and 65%-owned by Qatar Telecom.

MCE Finance prices notes

MCE Finance priced a $600 million issue of 10¼% eight-year senior unsecured notes (B1/B+) at 98.671 to yield 10½% on Wednesday, according to an informed source.

The deal priced on top of the price talk.

Deutsche Bank Securities, Bank of America Merrill Lynch, RBS Investment Bank, ANZ Investment Bank, Barclays Capital, Citigroup, Commerz, Credit Agricole, NAB Securities and UBS Investment Bank were the joint bookrunners.

Proceeds will be used to reduce debt under the company's City of Dreams project facility.

The issuing entity is a financing unit of Melco Crown Entertainment Ltd., a Hong Kong-based developer, owner and - through a Macau subsidiary that holds a gaming sub-concession - an operator of casino gaming and entertainment casino resort facilities focused on the Macau market.

Argentina eyes market

Argentina may cancel its planned $1 billion 8¾% seven-year bonds due to unfavorable market conditions, a market source said.

Barclays Capital, Citigroup Global Markets and Deutsche Bank Securities are the bookrunners for the bonds.

The sovereign also has extended the deadline to May 14 for institutional investors to swap defaulted bonds, according to a statement on the Argentina Finance Ministry's website.

The debt swap - which originally was slated to end May 12 - offers a second exchange opportunity to bondholders who didn't participate in a 2005 swap. Argentina is aiming for 60% participation.

Kazatomprom notes talked at 7%

Kazakhstan's JSC National Atomic (Kazatomprom) set price talk for its planned issue of unsecured five-year notes (expected rating Baa3/BBB-) at the 7% area, according to a market source.

BNP and JPMorgan are the bookrunners for the Rule 144A and Regulation S offering, which could total about $500 million and was marketed to potential investors during a roadshow that began May 4 in Europe, Kazakhstan and the United States.

Pricing could come as soon as Thursday, an informed market source said.

Kazatomprom is a Kazakhstan government-owned nuclear holding company.

CEB sets price talk

Russia's Credit Europe Bank set price talk for its planned dollar-denominated three-year eurobonds (Ba3//BB-) at 7¾% to 8%, according to an informed market source.

Citibank is the bookrunner for the Regulation S deal, which includes a put at par on the second anniversary.

The deal is expected to price by Thursday.

Credit Europe Bank is a lender controlled by Turkey's FIBA Group, a financial conglomerate.

Paul A. Harris contributed to this report

© 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.