Qatar prices $7 billion in three tranches; CDS tighten; Gerdau Holdings sets talk at 7.375% area

By Christine Van Dusen and Paul A. Harris

Atlanta, Nov. 17 - Though emerging markets remained relatively quiet on Tuesday as investors continued to focus on the current level of supply and looked ahead to year-end, there was one big deal that made some noise: a $7 billion, three-tranche issue from the State of Qatar.

The sovereign's $3.5 billion tranche of notes due Jan. 20, 2015 priced at a spread of Treasuries plus 185 bps, just below price talk of Treasuries plus 190 bps. The $2.5 billion tranche of notes due Jan. 20, 2020 priced at Treasuries plus 195 bps, in line with price talk. And the $1 billion tranche of notes due Jan. 20, 2040 priced at Treasuries plus 215 bps, also in line with talk.

Gray market levels for the bonds were above par, with the 15-year up 0.125 to 0.375, the 20-year up 0.125 to 0.625 and the 40-year up 1.125 to 1.625, according to a Europe-based market source. "The book, all together, was $27 billion."

Another issue that garnered attention on Tuesday was Panama's recent pricing of $1 billion 5.2% 10-year notes at a 187.5 basis points spread to Treasuries. "It didn't come very cheap to the existing curve," a buy-side source said.

And El Salvador's benchmark dollar-denominated 10-year notes is "doing the rounds right now" with a roadshow on Wednesday in New York and Thursday on the United States West Coast. "They should soon be coming out with talk on that."

Five-year credit default swaps finished Tuesday mostly tighter, with only Venezuela widening to close at 1,086.285 bps mid, up 48.67 bps.

Argentina closed at 988.18 bps mid, 19.445 bps tighter. Brazil closed at 117.685 bps mid, 5.735 bps tighter. Russia ended the day at 177.515 bps mid, 1.955 bps tighter. And Mexico finished up at 138.255 bps mid, 9.445 bps tighter.

Among corporates, OAO Gazprom closed at 233.565 bps mid, 2.27 bps tighter. And Russia's VTB Bank ended the day at 336.785 bps mid, 0.03 bps tighter.

Also on Tuesday, Delaware-based Gerdau Holdings set price guidance for its planned benchmark offering of dollar-denominated notes due January 2020 at 7.375% area, according to a market source.

Overall, there seems to be "good appetite and money on the sidelines to be put to work and new issues are being used as a way for that money to be put to work," the buy-side source said. "But really, people are mostly just focusing on the new issues and going into year-end. They're not making huge bets at this stage of the year."

Qatar prices $7 billion

The State of Qatar (Aa2/AA-) on Tuesday priced a $7 billion benchmark three-part offering of senior fixed-rate notes, according to a London-based market source.

The $3.5 billion tranche of notes due Jan. 20, 2015 was priced at a spread of Treasuries plus 185 bps, just below price talk of Treasuries plus 190 bps. The $2.5 billion tranche of notes due Jan. 20, 2020 was priced at Treasuries plus 195 bps, in line with price talk. And the $1 billion tranche of notes due Jan. 20, 2040 was priced at Treasuries plus 215 bps, also in line with talk.

The bookrunners for the Rule 144A and Regulation S deal were Barclays, Credit Suisse, Goldman Sachs, JP Morgan and Qatar's QNB.

"It's a highly rated sovereign and came in at attractive levels for the rating, so it's been well received, judging by the over-subscription of the book," a buy-side source said. "There's a lot of interest."

Proceeds will be used for general funding purposes, including contingency funding for entities that are owned or controlled by the state. In addition, proceeds will be used to fund various infrastructure investments in Qatar, and to fund the continued growth of Qatar's hydrocarbon sector as well as potential investments in the international oil and gas industry.

Gerdau talks notes at 7.375%

Delaware-based Gerdau Holdings Inc. set price guidance for its planned benchmark offering of dollar-denominated notes due January 2020 (expected /BBB-/BBB-) at the 7.375% area, according to a market source.

The bookrunners for the Rule 144A and Regulation S offering are HSBC, Santander, Itau, Bank of America Merrill Lynch, Citigroup and JP Morgan.

Proceeds will be used to repay indebtedness and extend the debt maturity profile.

A roadshow continued Tuesday in New York and Boston.

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