New Millicom notes trade up on debut; Turkey bond spreads tighten on reduced tensions

By Rebecca Melvin

New York, Oct. 12 – The new EM-focused Millicom International Cellular SA 6 5/8% senior notes due October 2026 (Ba2//BB+) were 101 1/8 bid 101 3/8 offered on Friday.

The $500 million issue, which priced at par on Thursday, traded above par out of the box, an investor said, adding that the new Millicom paper was no doubt benefitting from Friday morning's overall market strength.

New issuance was low this past week, with only a handful of new deals pricing. Despite the volatility Luxembourg-based Millicom priced $500 million of eight-year notes at par to yield 6 5/8%, and the notes were higher by more than a point in the gray market, which was indicated at 101 bid, 101.125 ask, the source said.

Final talk came tight to earlier price talk in the 6 7/8% area and at the wide end of initial guidance in the mid 6% area. The Luxembourg-based company operates in Latin America and Africa and plans to use proceeds of the new issue to help fund its acquisition of an 80% stake in Panama-based company Cable Onda.

In addition to EM-focused Millicom, another Luxembourg-based company with emerging markets focus priced this week for the Central and Eastern Europe region. CPI Property Group priced €600 million of 1.45% 3.5-year senior notes on Wednesday at 99.34 to yield mid-swaps plus 145 basis points, according to market source.

Credit Suisse, HSBC, Nomura, Raiffeisen Bank and Societe Generale priced the Regulation S notes.

The notes were listed on the Berlin and Munich stock exchanges on Friday and mature April 14, 2022.

Calendar deals eyed

Looking ahead, the Latin America region has a number of planned deals wrapping up roadshows, which may price next week. They include Sao Paulo-based JBS SA, the Republic of Peru and Mexico’s Contraladora Mabe SA de CV, among others.

Also on the calendar for next week for Central and Emerging Europe is ProCredit Holding AG & Co. KGaA, which is marketing a euro-denominated, sub-benchmark green bond with a three-year tenor (expected rating: //BBB). After meetings held in Frankfurt, Paris, London and Amsterdam, the roadshow wrapped up on Friday, with a deal to price thereafter subject to market conditions.

Meanwhile, the new deal calendar for the Arab Gulf states, which churned out the lion’s share of emerging markets issuance over the past five or six weeks, was empty, a London-based market source said.

Turkey spreads tighten

In secondary market action, Turkey’s sovereign bond spreads tightened by about 20 basis points early Friday after news that a Turkish court has lifted the house arrest of an American pastor, who is expected to be sent back to the United States.

Andrew Brunson’s release is “definitely good news as it helps diffuse tensions; but the market was also already weighted toward it, so I wouldn’t expect to see any further crazy tightening,” a London-based market source said.

Brunson was found guilty of aiding terror groups and sentenced to more than three years in prison, but was freed because of time already served, according to news reports. The Brunson detention contributed to a significant deterioration in U.S.-Turkey relations in recent months as the Trump administration pushed for his release and imposed trade sanctions against the sovereign in retaliation for being unable to do so.

Emerging markets debt overall was bouncing back on Friday after a two-day sell-off in global stocks on Wednesday and Thursday, during which credit struggled and spreads widened.

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