Benchmark deals from Petrobras, Senegal, GarantiBank; LatAm mixed as Venezuela swings down

By Colin Hanner

Chicago, May 16 – A handful of new issues hit the market on Tuesday in the emerging market space, the most notable among them from Petroleo Brasileiro SA (Petrobras).

The semi-public oil company sold $4 billion of combined add-ons to its 6 1/8% notes due 2022, 7 3/8% notes due 2027 and 7¼% notes due 2044 on Monday, the company said in three FWP filings with the Securities and Exchange Commission.

The largest of the add-ons was $2 billion of 7 3/8% notes due Jan. 17, 2027, which priced at 109.954 to yield 6%. Petrobras originally issued $2 billion of the notes in January 2017, and the total amount is now $4 billion.

The company priced $1 billion more 6 1/8% notes due Jan. 17, 2022 at 105.14 to yield 4 7/8%, lifting the total amount of the issue to $3 billion. Petrobras issued $2 billion of the notes in January 2017.

The issuer also sold another $1 billion of 7¼% notes due March 17, 2044. The add-on priced at 102.993 to yield 7%. Petrobras originally issued $1 billion of the notes on March 17, 2014, and the total amount is now $2 billion.

All three tranches were sold via wholly owned subsidiary Petrobras Global Finance BV.

Proceeds from the notes will go toward redeeming existing 2¾% notes due 2018, 5 7/8% notes due 2018 and 4 7/8% notes due 2018, as well as to pay down other existing debt and for general corporate purposes.

BB Securities Ltd., Banco Bradesco BBI SA, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., Itau BBA USA Securities, Inc. and Morgan Stanley & Co. LLC were joint bookrunners for the deal.

LatAm sovereigns mixed

The tone in Venezuela shifted to that opposite of Monday’s movement, where sovereign issues were generally higher. On Tuesday, bonds were across-the-board lower.

Petroleos de Venezuela SA’s 8½% notes due 2017 were down 1¼ points to an 87 bid, 88 offer.

Its 6% notes due 2026 were down ½ point to a 37½ bid, 38½ offer.

And its 5½% notes due 2037 were down ¾ point to a 37¼ bid, 38¼ offer.

Venezuela’s 6% notes due 2020 were down ½ point to a 50 bid, 51 offer.

Its 11¾% notes due 2026 were down 1 point to a 55 bid, 56 offer.

In Brazil, though, things were moving the opposite direction.

“Another day, another rally,” a market source said. “We saw buying all across the curve.”

The sovereign’s 5 5/8% notes due 2019 were quoted with a 106.45 bid, 106.80 offer, while its 6% notes due 2026 were up to a 110.70 bid, 111 offer.

The 5% notes due 2045 were quoted with a 92.2 bid, 92.95 offer, higher from Monday’s close.

In Colombia, liquidity was “still very poor,” according to a market source, though was trading “decently well,” whereas in Mexico, some bonds are “5-6 [points] wider from the tights of last week.”

Senegal tightens on $1.2 billion deal

Senegal priced $1.2 billion 6¼% 16-year notes at par, a market source said.

Price talks were in the 6½% area, tightening to 6¼.

A market source said the deal was oversubscribed at more than $4 billion.

Proceeds of the bond will be used to finance infrastructure spending in the country.

Citigroup, JPMorgan, Natixis, Societe Generale and Standard Chartered were joint bookrunners for the deal.

Garanti sells $750 million

Istanbul-based financial services company Turkiye Garanti Bankasi (GarantiBank) sold $750 million 6 1/8% Basel III-compliant tier 2 10-year bonds at par, a market source said.

The bonds priced on top of revised price talk.

The Rule 144A and Regulation S subordinated deal is non-callable for five years.

BofA Merrill Lynch, BBVA, BNP Paribas, Commerzbank, HSBC Bank plc and Standard Chartered Bank were stabilization managers for the deal.

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