Issuance from Nigeria, Latvia; gas prices rise again; Pakistan, Poland, Romania see action

By Christine Van Dusen

Atlanta, Feb. 9 – Nigeria and Latvia sold notes on Thursday as emerging markets assets benefitted from a rise in gas prices spurred by news that supply in the United States has declined while demand has remained strong.

But investors remain somewhat wary.

“Political risks in the Eurozone, Asia and the U.S. are the main drivers for uncertainties at the moment,” according to a report from Schildershoven Finance BV.

In trading, bonds from Pakistan were “a touch heavy with most high-yield sovereigns, as new, cheap supply hits the screens,” a London-based trader said. “The 2036s are seeing some buyers but for the 2024s and 2025s, a few clips have come out, pushing the 2021 lower in sympathy. The 2019s are still squeezed on the curve.”

Bonds from Central and Emerging Europe saw sellers on Thursday as spreads tightened on the back of rates.

“Poland’s 2026s feel a touch heavy but Romania remains fairly well-bid, tightening back into the Hungary curve, despite the recent political noise,” the trader said. “Hungary is two-way, but the curve is flattening as Street shorts bid for 2041s. And we are yet to see Asia lifers sell in this part of the world.”

Looking to Turkey, five-year credit default swaps were well-offered, he said.

“The front end of the curve has significantly outperformed, with the 2018s 20 basis points tighter on the day,” he said. “The curve continues to steepen as long-end bonds come out on the rates wobble. But overall, spreads are still firm.”

Nigeria prints bonds

In its new deal, Nigeria priced a $1 billion issue of 7 7/8% notes due in 2032 at par to yield 7 7/8%, a market source said.

The notes were initially talked at a yield in the 8½% area.

Citigroup and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

“While we see some medium-term risks due to unresolved issues with regard to monetary and economic reforms, political uncertainties and its high dependency on oil, we think that pricing is highly attractive at 8½%,” a London-based analyst said, prior to pricing.

The deal is “an eye-catcher, which will attract a substantial book,” he said. “We also consider supportive that Nigeria has only a limited $1.5 billion outstanding in international debt markets.”

Nigeria’s deal is also attractive because the bonds are “more resilient to low oil prices compared to [similar eurobonds],” he said.

Latvia sells two tranches

In another new transaction, Latvia priced a €650 million two-tranche issue of euro-denominated notes due in 2026 and 2047, a market source said.

The sovereign priced a €150 million add-on to its 3/8% notes due in 2026 at 93.735 to yield mid-swaps plus 38 bps.

A new €500 million issue of 2¼% 30-year notes priced at 98.287 to yield mid-swaps plus 98 bps.

Deutsche Bank, Societe Generale CIB and Goldman Sachs were the bookrunners for the Regulation S deal.

Stoneway Capital set to price

Stoneway Capital Corp. is expected to price on Friday a $500 million offering of 10-year senior secured notes, a market source said.

Jefferies is the bookrunner for the Rule 144A and Regulation S deal.

The notes are non-callable for five years.

Proceeds will be used to help fund four simple-cycle power plants in Argentina.

Stoneway Capital, a private company with equity contributed by Siemens AG, was formed for the purpose of constructing, owning and operating four simple-cycle power-generating plants in the Buenos Aires region of Argentina. The company has secured four power purchase agreements through Argentina’s Ministry of Energy and Mining for a 10-year period on each.

Stoneway Capital is incorporated in New Brunswick, Canada.

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