Arcos Dorados, Poland, Oschadbank, Brazil sell bonds on firm Friday; China ITS postpones

By Christine Van Dusen

Atlanta, July 8 - Emerging markets assets finished the week on fairly strong footing, despite weaker economic data from the United States and continued concerns about the global picture, with new notes from Argentina's Arcos Dorados Holdings Inc., the Republic of Poland, Ukraine's OJSC Oschadbank and Brazil.

"The overall mood is more constructive, with quality issuers freely able to borrow once again," a trader said. "The price action in the secondary is very firm."

Spreads were wider by about 10 basis points to 15 bps as a result of Treasury moves, a London-based trader said.

"But there's absolutely no selling," he said. "This makes sense, as all morning clients have been much better buyers. So why sell to the Street?"

Said another trader: "Liquidity was poor into the close, but again, it's Friday. We have peered into the summer and Ramadan abyss this week, with periods of very limited activity and where the market retains a solid footing. Locals keep topping up their holdings and the relative lack of new issues sees existing issues become even better placed."

Arcos Dorados, Brazil price

In its new deal, Argentina-based McDonald's franchisee Arcos Dorados sold ARS 400 million 10¼% notes due July 13, 2016 at par, a market source said.

The notes, which are payable in dollars, were talked at the 10 3/8% area.

Bank of America Merrill Lynch, Itau and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal. Proceeds will be used for capital expenditures, general corporate purposes and for the possible unwind of cross-currency swaps.

And Brazil priced a $50 million add-on to its existing 4 7/8% notes due Jan. 22, 2021 at 105.348 to yield 4.188%, or Treasuries plus 105 bps, a market source said.

This followed Thursday's pricing of a $500 million tap at the same price and yield.

Goldman Sachs and Santander were the bookrunners for the Securities and Exchange Commission-registered notes, which include a make-whole call at Treasuries plus 25 bps.

The issue now totals $2.162 billion.

Poland sells Samurai bonds

Poland sold ¥25 billion notes due July 29, 2015 at a yield of 1¼%, or mid-swaps plus 71 bps, according to a statement from the Ministry of Finance.

Daiwa Securities Capital Markets was the bookrunner for the deal.

And Ukraine-based lender Oschadbank priced a $200 million tap of its 8¼% notes due March 10, 2016 at 100.75, a market source said.

The notes were upsized from $100 million.

The original issue totaled $500 million and priced at par on March 2 via Credit Suisse and Morgan Stanley in a Regulation S deal.

"That's encouraging," a London-based market source said. "It just goes to prove a good deal will work at almost any price, and a bad deal won't work, however cheap it is."

CAF, Cosan price taps

These new deals followed the Thursday pricing of Venezuela-based lender Corporacion Andina de Fomento's $500 million tap of its 3¾% notes due Jan. 15, 2016, which came to the market at 100.858 to yield 3.542%, according to a company filing.

Credit Suisse and Goldman Sachs were the bookrunners for the Securities and Exchange Commission-registered deal.

The issue size now totals $1.1 billion.

And Brazil-based sugar company Cosan Ltd. priced a $200 million tap of its 8¼% perpetual notes at 103, a market source said

Morgan Stanley was the bookrunner for the Regulation S-only notes, which are callable on Nov. 5, 2015.

Proceeds will be used for working capital and general corporate purposes.

The issue size now totals $500 million.

Dominican Republic ahead

In other deal-related news, the Republic of Sri Lanka is planning a roadshow starting July 11 for a $1 billion offering of 10-year notes, a market source said.

Bank of America Merrill Lynch, Barclays Capital, HSBC and RBS are the bookrunners for the deal.

And the Dominican Republic has mandated Barclays Capital and JPMorgan as bookrunners for a $500 million issue of notes and a roadshow, a market source said.

The marketing trip for the Rule 144A and Regulation S deal will begin July 14 in Los Angeles and travel to San Francisco, London and Boston before wrapping up on July 20 in New York.

China ITS cancels deal

Friday also saw transportation infrastructure technology solutions and services provider China ITS Holdings Co. Ltd. cancel its planned issue of renminbi-denominated notes due to market conditions, according to a company announcement.

DBS Bank and Wing Lung Bank were the bookrunners for the deal.

Proceeds were to be used to fund acquisitions, expenses and capital required for overseas growth, and for general working capital.

And the final book for South Korea-based KB Kookmin Bank's new issue of $300 million 3 5/8% fixed-rate senior notes due Jan. 14, 2017 - which came to the market on Thursday at 99.114 to yield 3.805% - was $1.4 billion with 120 accounts involved, a market source said.

About 80% of the orders came from Asia and 20% from Europe, the Middle East and Asia.

Banks accounted for 47%, fund managers 27%, insurers 8%, central banks and agencies 7%, private banks 7%, corporates 3% and others 1%.

Turkey, Ukraine in focus

In trading, Turkey's sovereign curve was well supported, though prices were little changed from the previous day's closing levels, a London-based trader said.

"Yapi Kredi saw some selling," another trader said.

The Ukraine sovereign was boosted by the parliament's passing of the final round of the pension law, the London trader said.

"This explains how Oschadbank can tap their 2016 deal by $200 million and not move the market," the other trader said.

Some action in secondary

Prices were mostly unchanged for names from Africa.

"It feels like there's some good demand out there for Nigeria-based GTB Finance BV's 2016s," the trader said.

Looking to Russia, corporates like VTB Bank and Bank of Moscow were active and showing "great resilience, despite ratings downgrades for both," a market source said.

And sukuk issues from the Middle East "feel fine and are well placed," a trader said. "They continue to get soaked up. There remains a wall of money looking for these assets.

"They remain a compelling diversification play for the global investor."

And Kazakhstan-based BTA Bank's 2018s opened at 881/4, firmer by about a half-point.

© 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.