Gerdau prices; CDS widen; slower pace makes room for more issuers; Cayman, CEDC on tap

By Christine Van Dusen and Paul A. Harris

Atlanta, Nov. 18 - Emerging markets were quiet and firm Wednesday as supply continued to drop off, making room for issuers who might not have been as well-received when there was such a heavy stream of new deals, according to market sources.

"The slower pace has opened up opportunities for issuers in a position to go through the kind of limited window that remains," a New York-based source said.

Case in point: the €580 million equivalent in dollar- and euro-denominated senior notes planned by Poland-based beverage producer and distributor Central European Distribution Corp., which could price as soon as Thursday.

"That is certainly a transaction the market would not have been able to support earlier this year," a London-based market source said.

In general, it seems that "the market is back for new issues," the New York-based source said.

The source pointed to Gerdau Holdings Inc., which on Wednesday priced $1.25 billion 7% senior unsecured notes due Jan. 20, 2020 at 98.2 to yield 7¼%, or Treasuries plus 390.1 basis points. Price talk had been set at the 7 3/8% area. "Gerdau is well over-subscribed," the source said.

Another sign of life among issuers was the recent pricing of a $7 billion three-tranche issue from the State of Qatar.

"The book was about $28 billion, which is pretty remarkable and shows that for the right name and the right level there's a good amount of cash that can be put to work," the source said.

Other issues have been trading well this week, including Jakarta, Indonesia-based state-owned electricity utility PLN, which on Oct. 30 priced its $1.25 billion 7¾% notes due 2019 at 99.152 to yield 7 7/8%. "It's trading up by close to a full point now in the last two days," a trader said.

Five-year credit default swaps mostly widened on Wednesday, with OAO Gazprom closing at 234.57 bps mid, 1.005 bps wider, and Russia's VTB Bank closing at 337.615 bps mid, 0.83 bps wider.

Among sovereigns, Brazil closed at 121.605 bps mid, 3.92 bps wider, and Russia closed at 182.115 bps mid, 4.6 bps wider. Mexico also widened, finishing the day at 141.655 bps mid, up 3.4 bps. And Venezuela closed at 1,090.38 bps mid, 4.095 bps wider. Argentina was alone in closing tighter, at 976.355 bps mid, down 11.825 bps.

Also in sovereigns on Wednesday, the Government of the Cayman Islands set price talk for its planned $312 million 10-year fixed bulled notes at 6% to 6 1/8%. That issue is expected to price on Thursday.

"We still see issuers rushing to get some issues out the door while the market's still hot ahead of the new year," the London-based market source said.

"We think there still will be plenty of demand once we get to January. Obviously no one has a crystal ball and it's difficult to see what's going to happen. But given the strong run toward the end of 2009, we expect the momentum to carry on to 2010."

Gerdau prices $1.25 billion

Gerdau Holdings priced $1.25 billion 7% senior unsecured notes (/BBB-/BBB-) due Jan. 20, 2020 at 98.2 to yield 7¼%, or Treasuries plus 390.1 bps, according to a market source.

Price talk was set at the 7 3/8% area.

The bookrunners for the Rule 144A and Regulation S issue were HSBC Securities, Santander Investment Securities, Banco Itau Europa (London), Bank of America Merrill Lynch, Citigroup Global Markets and J.P. Morgan Securities.

The notes include a change-of-control put at 101%.

Proceeds will be used to repay debt and to extend the company's debt maturity profile.

Delaware-based Gerdau Holdings is a subsidiary of Porto Alegre, Brazil-based steel producer Gerdau SA.

Cayman Islands talks $312 million

The Government of the Cayman Islands (Aa3) set price talk on its planned $312 million 10-year fixed bullet notes at 6% to 6 1/8%, according to a market source.

The bookrunner for the Rule 144A and Regulation S issue is HSBC.

Proceeds will be used to repay outstanding bridge financing.

The issue is expected to price Thursday.

© 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.