Posco, Sigma Alimentos, Georgia sell notes; investors bullish on EM; recent issues active

By Christine Van Dusen

Atlanta, April 7 - South Korea's Pohang Iron and Steel Co., Mexico's Sigma Alimentos SA de CV and Georgia were among the emerging markets issuers to bring deals to market on Thursday as risk appetite increased and recent new deals fared well in the secondary market.

"The credit markets had a strong tone today as risk aversion showed further signs of waning," said Gavan Nolan, an analyst with Markit, in a report. "It seems a far cry from the volatility on display last week."

Emerging markets debt spreads stayed steady on Thursday, with the JPMorgan Emerging Markets Bond Index Plus spread closing flat at Treasuries plus 247 basis points. That still represents a 20 bps tightening since the start of the month and 50 bps since mid-March.

Peru was tighter by 7 bps and Venezuela by 5 bps on Thursday.

"I cannot find a single new bearish angle to discuss," a London-based market source said. "All the well-known ones seem to be fully discounted by the market."

Posco, Sigma Alimentos price

In its new deal, South Korea-based steel maker Pohang Iron and Steel (Posco) sold $700 million 5¼% notes due April 14, 2021 at 99.593 to yield 5.303%, or Treasuries plus 175 bps, a market source said.

Barclays Capital, BNP Paribas, Deutsche Bank and Goldman Sachs were the bookrunners for the Rule 144A and Regulation S notes.

Proceeds will be used for general corporate purposes.

And Mexico-based branded foods producer and distributor Sigma Alimentos sold $450 million 5 5/8% senior notes due April 14, 2018 at 99.163 to yield 5.772%, or Treasuries plus 280 bps, a market source said.

The notes priced in line with talk, which was set at the Treasuries plus 287.5 bps area.

Merrill Lynch and JPMorgan were the bookrunners for the Rule 144A and Regulation S notes, which include a change-of-control put at 101%.

Proceeds will be used to repay debt and for general corporate purposes.

Georgia prices bonds

Also on Thursday, Georgia sold $500 million 6 7/8% notes due April 12, 2021 at 98.233 to yield 7 1/8%, or Treasuries plus 356.5 bps, a market source said.

Goldman Sachs and JPMorgan were the bookrunners for the Rule 144A and Regulation S notes, which were talked at a yield of 7¼% to 7½%.

Proceeds will be used for the 2013 notes tender and general budgetary purposes.

"The new Georgia 10-year dollar notes look set to be a blow out," a source said. "While optically rich, at 75 bps cheap to Sri Lanka, you can argue it has some value. These kinds of liability management trades seem to be very much in vogue."

Mirabela, Singamas do deals

In another new deal, Australia-based nickel producer Mirabela Nickel Ltd. priced an upsized $395 million issue of seven-year senior notes at par to yield 8¾% on Thursday via JPMorgan and Barclays Capital.

The notes, which were guaranteed by Mirabela Mineracao do Brasil Ltda. and Mirabela Investments Pty. Ltd., were marketed to a mix of high-yield and emerging markets accounts.

This followed the Wednesday pricing of Hong Kong-based container manufacturing and logistics company Singamas Container Holdings Ltd.'s RMB 1.38 billion senior notes due April 14, 2014 at par to yield 4¾%, a market source said.

RBS, DBS Bank and ING were the bookrunners for the Regulation S-only transaction.

Russian lenders get attention

Thursday also saw Russia-based lender OJSC Promsvyazbank mandate Deutsche Bank, JPMorgan and Promsvyazbank for a roadshow starting April 11, a market source said.

A Rule 144A and Regulation S offering of notes is expected to follow.

In late March the bank announced plans for a $500 million offering of notes.

But the Russian issuer that was getting the most attention on Thursday was Gazprombank and the lender's 2022 notes.

"They remain the focus bond," the London-based market source said.

Said a trader: "The 2022s remain the one squeezed issue, which also sees the most volume. But then again, Gazprom's 2015s are only 40 bps over Russia."

Bos Bank taps bookrunners

Also on Thursday, Poland-based lender Bank Ochrony Srodowiska SA (Bos Bank) mandated Barclays Capital, ING Bank and Riaffeisen Bank International as joint bookrunners for a euro-denominated issue of senior notes, a market source said.

A roadshow for the Regulation S offering will start April 12.

And Brazil-based health and personal care products manufacturer Hypermarcas SA plans to issue $500 million senior notes due 2021.

Bradesco BBI, Citigroup, HSBC, Itau and JPMorgan are the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for five years.

A roadshow will take place from April 11 to April 14.

Proceeds will be used to repay a portion of existing debt, for working capital and for general corporate purposes.

Investors eye GarantiBank

For another upcoming deal, Turkey-based lender Turkiye Garanti Bankasi AS (GarantiBank) mandated Deutsche Bank, Goldman Sachs, JPMorgan and Standard Chartered Bank, a market source said.

The benchmark-sized Rule 144A and Regulation S offering will be marketed on a roadshow from April 11 to April 13.

"We have mostly seen sellers of banks, potentially preparing to accommodate the new Garanti issue," a source said.

Market watchers were also whispering about possible issuance from other Turkish names, including VakifBank, Denizbank and Finansbank.

Still, the Turkey sovereign opened the day weaker, and there was little trading activity among corporates, a trader said.

"Turkish sovereigns were softer today, trading 2 to 3 bps wider," he said.

Mexico oversubscribed

In other deal-related news, the final book for Mexico's $1 billion tap of its 6.05% notes due Jan. 11, 2040 - which came to market Wednesday at 101.358 to yield 5.85%, or Treasuries plus 134.6 bps - was $4.4 billion, a market source said.

Merrill Lynch and Deutsche Bank were the bookrunners for the deal.

About 200 accounts were involved, the source said.

Mexico originally priced $1.5 billion of the 2040 notes in 2008. An additional $750 million were sold in 2009 and another $1 billion in April of 2010.

"They normally time the market very well," a source said.

Dubai offers value

Thursday was, in general, a more balanced trading day.

"We've had a decent move, spreads have had a great run and valuations have been looking a little stretched," a trader said.

Dubai offered investors some value on Thursday, he said.

"Dubai still offers pockets of value as their economy ticks along and the realization of breakneck borrowing is no longer sustainable," a trader said. "The credit is not traveling along the highway at 120 mph anymore. Rather, it is learning to cruise at around 85. There's a decent rally in Dubai but the credit is still offering some yield and spread."

The sovereign has hired four banks to raise financing backed by toll road receipts, he said.

"Seems on face value a fairly good idea, given they are using more diversified funding strategies," he said.

MENA in focus

The trader also noted some interest in Qatari Diar's 2020s, National Bank of Abu Dhabi's notes and the bonds from International Petroleum Investment Co.

"They faded slightly to close out still well supported but off the high prints," he said. "It's interesting to see the sterling notes trade at 101.75, or Gilts plus 245 bps. This is at least 50 bps off the wide spread prints and 25 bps tighter from the launch spread. It's clearly not followed by most, but it's an interesting name for the sterling real-money guys."

He also saw some buyers for Bahrain, Egypt and Tunisia. "But no one is really chasing the credits higher," he said. "They may have found some sort of clearing level here."

Abu Dhabi's corporates, sovereign and quasi-sovereigns opened the day firm, but softened a bit by day's end.

"Abu Dhabi and Qatar have caught up, big-time," he said.

Nigeria saw some movement, with the sovereign's 2021 bonds trading at 101.50. And Indonesia lagged ahead of its expected issue of $2 billion notes due 2021 and 2041 via Deutsche Bank, JPMorgan and UBS.

Recent issues trade up

In taking a look at how some recent new issues have fared in the secondary market, Croatia's 6 3/8% notes due 2021 that were issued at 98.125 were seen trading Thursday at 103 bid, 103.75 offered. The 7¼% notes due 2016 from Montenegro - which priced at 99.492 - were trading Thursday at 99.625 bid, 100.625 offered.

The 2031 7.487% notes from OAO Russian Railways Co. were seen at 102.50 bid, 103 offered after pricing at par. And the 10.95% notes due 2016 from Ukraine-based agriculture producer and trader Mriya Agro Holding plc were trading at 101 bid, 101.75 offered after pricing at 98.876.

Meanwhile, the Republic of Hungary's 6 3/8% 2021 notes, which came to market at 99.062, were trading Thursday at 103.125 bid, 104.125 offered. And the sovereign's 2041 notes, which priced at 98.084, were seen at 105.875 bid, 106.875 offered on Thursday.

Paul A. Harris contributed to this story

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