Croatia slightly better on debut; Romania on tap; Enel Chile prices; secondary cautious

By Rebecca Melvin

New York, June 7 – The Republic of Croatia’s newly priced 2.7% notes traded up just slightly upon release for secondary market dealings on Thursday after the sovereign priced €750 million of the 10-year notes at 98.302 and a yield spread set on top of its existing curve, market sources said.

The new Croatia notes were seen 98.4 on the bid side after they priced at 98.3, a London-based market source said.

The Croatia deal was seeing better support in Thursday’s market than the Slovak Republic new issues saw in Wednesday’s market, but there has been a constructive tone all week, the market source said.

The Slovak issues, including €1 billion of 10-year notes and €500 million of 50-year notes, traded flat to slightly lower by 0.5 point on their debut on Wednesday.

Meanwhile, Romania announced another new deal for the Central and Emerging Europe region. The sovereign, through its Ministry of Finance is pricing on Thursday a dollar-denominated offering of 30-year notes. Pricing was guided to a yield of 5¼%, plus or minus 5 basis points. That pricing was tightened from initial price talk of 5.4%.

In addition, Enel Chile SA priced $1 billion of 4 7/8% notes due 2028 at 98.824 for a yield of 5.026%, or spread of 210 bps over U.S. Treasuries.

The Securities and Exchange Commission-registered deal was brought by six joint bookrunning managers including BBVA Securities Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Santander Investment Securities Inc. and Scotiabank.

Proceeds will be used to refinance outstanding borrowings under its credit agreement, which was used to fund the cash portion of a 2018 reorganization, and for general corporate purposes.

Enel Chile is power generation and distribution company that is 61.9% owned by Italy’s Enel SpA.

Corporacion Andina de Fomento priced €500 million five-year notes at 99.917 on Wednesday to yield 0.76%. The Regulation S notes were sold via joint bookrunners Barclays, BBVA, Credit Agricole and JPMorgan.

CAF is a regional lender based in Caracas, Venezuela. It was last in the market for €1 billion of 1 1/8% notes due 2025 that priced in early February.

Another deal on the Latin America calendar, Empresas CMPC SA, was not heard to have priced yet, according to a syndicate source away from the deal. The Santiago, Chile-based pulp and paper company had been planning a dollar deal of intermediate notes that was set to roadshow May 11 to May 15.

Frontera Energy Corp. began a roadshow this week for an offering of $500 million of five-year notes, so that deal was not expected to price until next week.

In the secondary market, the tone was described as still cautious, with spreads resisting coming back in after widening out last week amid a number of worries that remain in the broader markets. Those red flags include currency concerns and the possibility of continuing strength of the U.S. dollar and the expectation of higher rates. Market players are also still trying to determine how potential tariff battles will play out for trade and what impact those will have on global growth.

“I don’t think that spreads have come in after widening out last week because people are still cautious,” the London-based source said.

The source could not say what the catalyst was that sparked the CEE region new issue market this week. But it makes sense that once one deal goes to market, the others that are in the pipeline will price as well, he said.

“I’m sure the banks are pitching hard that the market is still open,” the source said.

One deal that was on the calendar for the region, Atrium European Real Estate Ltd. has been put on hold. The Jersey, Channel Islands, company that owns, operates and develops shopping centers in Central and Eastern Europe was eyeing an offering of least $300 million of seven- or eight-year notes. But on Wednesday, the company postponed its tender offer and said it will update the time and date “in due course.”

A second deal by Polish-focused retail property company EPP NV, formerly known as Echo Polska Properties, is finishing up its roadshow for a planned debut issue of euro-denominated notes due in five years or a similar maturity. That deal was expected to be pushed to next week’s business.

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