Costa Rica, Southern Copper, Yanzhou Coal eye bonds; UK holiday, summer doldrums dampen EM

By Christine Van Dusen

Atlanta, Aug. 27 - China's Yanzhou Coal Mining Co. Ltd., Costa Rica and Latin America-focused Southern Copper Corp. took steps toward the market on a Monday quieted by the U.K. holiday and lackluster economic news ahead of Friday's speech from Federal Reserve Chairman Ben Bernanke.

"Following disappointing global economic data on Friday, the reality check for markets continued today as the forward-looking component of the German IFO [think tank] survey fell short of expectations," according to a report from Barclays Capital.

Market-watchers are anxiously awaiting Friday's Fed symposium in Jackson Hole, Wyo., to see if officials initiate further bond buying. Expectations are high, given that the minutes of a recent meeting suggested enthusiasm for a third round of quantitative easing.

Meanwhile, oil prices rose about 1% following a decline in production due to the tropical storm in the Gulf of Mexico and an oil refinery fire in Venezuela, according to a report from UFS Investment Co.

In response, Russia's 2030 bonds rose about 1% on Monday morning, approaching their all-time maximum.

"Today we anticipate considerable growth of oil and gas long-term bonds and sovereign bonds," UFS said.

But overall, emerging markets activity was muted on Monday, with just three issuers planning new notes.

Costa Rica received approval from its congress to issue up to $4 billion of international bonds, a market source said.

The notes are expected to be issued over the next 10 years, with about $500 million coming to the market by November.

"Markets are extremely quiet," according to a report from Erste Group Research.

Southern Copper plans notes

Southern Copper - which focuses on copper mining, smelting, refining and exploration in Peru, Mexico, Argentina, Chile and Ecuador - is planning to issue notes due 2022 and 2042, according to a market source and an FWP filing with the Securities and Exchange Commission.

A source away from the trade said late Monday that pricing is not expected until the coming week.

Credit Suisse, HSBC and Morgan Stanley are the bookrunners.

Proceeds are being used for general corporate purposes, including financing a capital expenditure program.

Southern Copper was last in the U.S. bond market with a $1.5 billion offering in two tranches on April 13, 2010. A 5 3/8% 10-year note from that trade priced at 162.5 basis points over Treasuries, and a 6¾% 30-year bond sold at 212.5 bps over Treasuries.

The integrated copper producer is based in Phoenix.

Yanzhou gets green light

Yanzhou Coal's board of directors approved the proposed issue of up to $2 billion of bonds, according to a 6-K filing with the Securities and Exchange Commission.

The bonds are to be issued through Yancoal International Resources Development Co., Ltd. or other wholly owned offshore subsidiaries.

The planned bonds are subject to shareholders' approval at a general meeting. If granted, the approval would be valid for 24 months.

The coal production, processing, marketing and transportation company is based in Zoucheng, China.

Ukraine in focus

In trading, most bonds from Ukraine closed unchanged on the day, according to a report from Dragon Capital.

"Volatility has all but disappeared," the report said.

The sovereign's 2021 bonds traded at 92.75 bid, 93.75 offered, while the 2017 bonds were seen at 100.25 bid, 101.25 offered.

Dragon Capital's Svetlana Rusakova reported some activity in banks, such as Ukreximbank and its 2015 notes, which traded at 93.50 bid, 95.50 offered. First Ukrainian International Bank's notes were quoted at 94.50 bid, 96.50 offered.

And Oschadbank was quiet at 87.50 bid, 89 offered, Rusakova wrote.

"A very quiet trading session," the report said.

Marisa Wong contributed to this article.

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