EM credit softens; Saudi Arabia, Lebanon, Oman weaker; Mexico’s Grupo Bimbo prices notes

By Rebecca Melvin

New York, Nov. 7 – Emerging market pricing action was soft on Tuesday with some real damage done in some credits in the Middle East. But new issues continued to price.

Dubai’s Emirates NBD priced $750 million five-year notes (expected rating: A3//A+), which were last talked ahead of pricing at a yield spread of mid-swaps plus 125 basis points. Pricing had been tightened from initial talk in the area of mid-swaps plus 140 bps. Prospect News was unable to obtain final terms for the Regulation S notes before its deadline.

The Republic of Lithuania was also heard to have priced a €350 million tap of its existing 0.95% notes due 2027 and a €200 million tap of its 2.1% notes due 2047.

In Latin America, Grupo Bimbo SAB de CV priced $650 million of 30-year notes (expected ratings: Baa2/BBB/) with a 4.7% coupon at 99.776 for a yield spread of Treasuries plus 195 bps.

Mexico City-based Grupo Bimbo is a bakery and food company.

Also in primary market action, African Development Bank announced it is planning to price a dollar-denominated benchmark-sized offering of five-year global Securities and Exchange Commission-exempt bonds. The deal was being talked to yield mid-swaps plus 12 bps and was expected to price on Wednesday.

The issuer is a multilateral development bank based in Abidjan, Ivory Coast.

Meanwhile, the secondary market was described to have had “an ugly session, with pressure on the market across the board,” according to a London-based trader.

Debt from Saudi Arabia was in the cross-hairs of pressure with follow-through action from Monday when credit widened in the aftermath of dozens of arrests of Saudi government and business officials tied to that county’s crackdown on corruption.

The Saudi government sold $12.5 billion of notes in the international market in September. On Tuesday there was “sizable Asian selling of Saudi Arabia and Oman credits and no meaningful support in the market,” a source said.

The Saudi Arabia notes due 2028 closed Tuesday at 98 3/8 bid, 98 5/8 offered, and were wider by about 10 bps.

The Lebanon sovereign curve had to be remarked by one source after the credit blew out 50 to 100 bps on Monday in the aftermath of its prime minister Saad Hariri announcing his resignation, claiming he feared for his life and making the announcement from outside the country in Saudi Arabia.

“Credit smashed wider and [is] inverting,” a trader said.

The Lebanon 2018 bonds traded at 98 intraday.

Lebanon 2022s were offered at about 92½ and were wider by 200 bps on the month.

Iraq’s notes were wider by about 20 bps, Jordan sovereigns were wider by 12 to 15 bps, and Oman was wider by 15 to 20 bps.

In the broader markets, the Dow Jones industrial average was able to notch a fourth straight record high close, while the S&P 500 ended slightly lower after Priceline Group Inc. lowered profit guidance and financials slipped.

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