Chile, Banco Industrial, Finansbank price notes to end positive week; fund inflows rise

By Christine Van Dusen

Atlanta, Oct. 26 - Chile on Friday priced the week's biggest deal - joining Guatemala's Banco Industrial SA, Turkey's Finans Bank AS (Finansbank) and Turkey's Turkiye Petrol Rafinerileri AS (Tupras) - amid fairly positive sentiment from emerging markets investors.

Several other issuers moved forward with planned bond offerings, including Brazil-based lender Caixa Economica Federal, Dominican Republic-based Latin American Airports Holdings, SOHO China Ltd., Brazil's Samarco Mineracao SA and Poland.

All of this came against the backdrop of continued inflows into EM bond funds, according to a report from data tracker EPFR Global.

During the week the funds took in about $1.2 billion, bringing the year-to-date total up to $44.2 billion.

"Fund flow data from late October suggests that the U.S. Federal Reserve's efforts to chase investors out of safe asset classes into riskier ones are producing decidedly mixed results," EPFR said.

Hard currency funds outpaced local currency funds by a two-to-one margin as retail investors retreated from the latter.

"During 2010, the year the existing inflow record was set, they committed over $13 billion to EM local currency bond funds," the report said. "Year to date, they have pulled out $1 billion from those funds."

In trading, Ukraine bonds moved higher to end the week, according to Svitlana Rusakova of Dragon Capital.

"Ongoing demand for duration pushed Ukraine's 2020s about 3/4-point higher to 104 bid, 105 offered and Ukraine's '21s up to 105 bid, 106 offered," she said.

On the corporate side, Oschadbank saw some weakness but still experienced some demand.

Chile does big deal

Chile priced a two-tranche issue of $1.5 billion notes due in Oct. 30, 2022 and 2042 with bookrunners Bank of America Merrill Lynch, HSBC and JPMorgan, a market source said.

The $750 million tranche of 2¼% notes due in 2022 priced at 98.858 to yield Treasuries plus 55 basis points. The notes priced tighter than talk, set at the Treasuries plus 75 bps area.

The $750 million tranche of 3 5/8% notes due 2042 priced at 98.398 to yield Treasuries plus 75 bps. Those notes priced tighter than initial guidance of the Treasuries plus 100 bps area.

Proceeds from the Securities and Exchange Commission-registered deal will be used for general purposes of the government.

"The placement of $1.5 billion in dollar-denominated bonds at record-low yields reflects both the markets' positive view of Chile's economic policy and the economy's future prospects as well as the limited supply of 'safe' assets," Barclays said in a report. "The demand for the bonds was strong: they were six to seven times oversubscribed."

Lenders price notes

In another new deal, Guatemala-based lender Banco Industrial priced $500 million 10-year notes at par to yield 5½%, or Treasuries plus 367.8 bps, via Bank of America Merrill Lynch and Citigroup in a Rule 144A and Regulation S transaction.

The notes were talked in the low-6% area.

And Turkey-based Finansbank priced $350 million 5.15% five-year notes at 99.025 to yield 5 3/8%, or Treasuries plus 456.4 bps, matching price talk.

Citigroup, Morgan Stanley, RBS and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

Tupras sells bonds

Also on Friday, Turkey-based petrochemical company Tupras priced $700 million 4 1/8% notes due May 2, 2018 at 99.791 to yield Treasuries plus 337.5 bps, a market source said.

The notes priced tighter than talk, set in the Treasuries plus 350 bps area, via Citigroup and Deutsche Bank in a Rule 144A and Regulation S deal.

And Brazil-based lender Caixa Economica Federal added a 10-year tranche to its planned issue of dollar-denominated five-year notes.

The 10-year tranche is being talked at the Treasuries plus 200 bps area. Price talk for the five-year notes was previously set at the Treasuries plus low-200 bps area.

Bank of America Merrill Lynch, Deutsche Bank and HSBC are the bookrunners for the Rule 144A and Regulation S deal.

LatAm Airports taps dealer

Dominican Republic-based Latin American Airports has mandated JPMorgan for a roadshow from Tuesday to Thursday for a possible issue of notes, a market source said.

A Rule 144A and Regulation S transaction will follow, subject to market conditions.

And Brazil's Samarco Mineracao set initial price talk at the Treasuries plus mid- to high-200 bps area for its 10-year dollar benchmark-sized notes.

Citigroup, HSBC and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for the expansion of processing, logistics and production facilities and for general corporate purposes.

Samarco is a Belo Horizonte, Brazil-based mining and iron ore company that is joint-owned by Brazil's Vale SA and BHP Billiton plc.

SOHO China plans roadshow

In other deal-related news, Beijing-based property developer SOHO China is planning a roadshow for an issue of dollar notes with HSBC, Morgan Stanley, Standard Chartered Bank, Barclays and Goldman Sachs.

Proceeds from the Regulation S deal will be used for general corporate purposes.

And Poland has mandated Nomura and SMBC Nikko to lead a renminbi-denominated issue of notes, a market source said.

No other details were immediately available on Friday.

Brunswick Rail oversubscribed

Russia-based Brunswick Rail Finance's recent $600 million issue of 6½% five-year notes drew about $3 billion from 216 orders, a market source said.

The notes priced at par to yield 6½% via Goldman Sachs, RBI, UBS and VTB Capital in a Rule 144A and Regulation S deal.

About 66% came from the United States, 26% from the United Kingdom and Ireland, 7% from Europe and 1% from Asia.

Funds, insurers and pensions accounted for 85%, banks and private banks 3% and others 12%.

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