Argentina prices $9 billion notes; LatAm calendar grows; Venezuela bonds to trade flat

By Rebecca Melvin

New York, Jan. 5 – Argentina priced a combined $9 billion of five-, 10- and 30-year notes at coupons that were lower than those on similar debt priced last year.

The Securities and Exchange Commission-registered notes included $1.75 billion of five-year notes priced at par to yield 4 5/8%; $4.25 billion of 5 7/8% 10-year notes priced at 99.070 to yield 6%, and $3 billion 6 7/8% 30-year notes at 99.060 to yield 6.95%.

Last January Argentina priced $3.25 billion of five-year notes at par for a coupon that was a full percentage point higher at 5 5/8% and $3.75 billion 10-year notes at 99.112 to yield 7%.

The emerging primary market got off to a strong start for 2018 with more than $13 billion of new notes pricing in the first holiday-shortened week of the year and a solid calendar of deals expected to price next week.

Financial markets were closed on Monday in observance of New Year’s Day.

Argentina accounted for the bulk of this past week’s issuance. But Mexico was another big issuer with an upsized $3.2 billion of notes including $2.56 billion of new 10-year global notes and an upsized $645.3 million tap of its 4.6% global notes due 2048.

On Friday, a handful of Latin American corporate issuers joined the calendar including Brazil’s Marfrig Global Foods SA’s dollar-denominated benchmark of notes and Rede D’Or Sao Luiz SA’s planned $500 million of seven- or 10-year senior unsecured bonds (expected rating: //BB+). Brazil’s Rumo SA’s planned $500 million offering of notes due 2025 (expected ratings: /B+/BB-) is also on the calendar.

From Mexican corporate issuers, BBVA Bancomer mandated banks to manage a benchmark-sized offering of dollar tier 2 notes, and auto parts supplier Nemak SAB de CV was also expected to price a deal next week according to sources.

Venezuela sovereign debt was also in focus on Friday, although activity in the bonds was muted after word that the trading convention will change on Monday to flat, or without accrued interest, as per a decision of the Emerging Market Traders Association on Friday.

An EMTA spokesman could not confirm the change, but a trader said that the market has been watching developments and he expected an increase in trading activity and higher prices on Monday. Prices of the severely distressed debt were expected to be a couple of points better.

Currently the Venezuela notes due 2022 are trading below 20, and the Venezuela notes due 2026 and 2031 are trading at about 19.5.

“I feel that it’s odd that they didn’t do this before,” the market source said regarding the EMTA decision. “But there was an expectation that because the government said it would pay, it would pay.” Instead, “the government has been buying time, and I don’t think the market is going to get paid anything,” the source said.

Marfrig to price

Sao Paulo-based protein company Marfrig was planning to price a dollar-denominated benchmark of notes concurrently with two series of older Marfrig notes.

Bookrunners on the deal include BB Securities Ltd., Banco Bradesco BBI SA, Banco BTG Pactual, HSBC Securities, Nomura Securities International and Santander Investment Securities.

Investor calls for the deal are slated for Monday through Wednesday.

Marfrig is offering to purchase for cash any and all $251.84 million outstanding of its 8 3/8% notes due 2018 and $660.34 million outstanding of 6 7/8% notes due 2019.

Rumo and Rede D’Oro to price

Rumo, a Brazilian railroad and logistics company, is planning to price $500 million offering of notes due 2025. BB Securities, Bank of America Merrill Lynch, Bradesco, Citigroup, Itau and Santander are bookrunners for the Rule 144A and Regulation S notes.

Investor meetings are scheduled to be held on Monday and Tuesday in London, New York, Boston and Los Angeles.

Proceeds are earmarked for prepaying debt at its operating subsidiaries, mainly Rumo Malha Norte, as part of the company’s liability management plan.

Brazilian hospital operator Rede D’Or plans to price up to $500 million of seven- or 10-year senior unsecured bonds with net proceeds to be used for general corporate purposes, including the repayment of indebtedness, capital expenditures and/or to increase liquidity.

BBVA, Nemak join calendar

Mexican financial institution BBVA has mandated a benchmark-sized offering of dollar tier 2 notes, according to a market source on Friday.

BBVA Securities, BNP Paribas, Bank of America Merrill Lynch and J.P. Morgan are managing the deal and hosting investor meetings beginning on Friday and wrapping up on Wednesday, with stops in London, New York and Boston.

Nemak was also expected to price a Rule 144A and Regulation S deal.

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