Shimao tightens talk on $500 million notes; Evraz lower on acquisition; VTB, Petrocommerce unveil deals

By Paul A. Harris

St. Louis, Nov. 20 - Flows in all emerging markets names were light across the board, a trader said shortly after the New York close, adding that investors may have taken early leave for the upcoming Thanksgiving Day celebration in the United States.

Meanwhile a market source reported that some bonds of Russian steel and mining firm Evraz Group SA were lower on the news that it will acquire Oregon Steel Mills in a transaction valued at approximately $2.3 billion.

And regardless of whether or not investors are scarce, news surfaced on deals that are expected to price this week - 'ere the Thanksgiving hatchet comes down.

Softer in the morning

At the New York open a source said that the broad market was trading slightly wider, and marked the Brazil sovereign bonds due 2040, said to be the most liquid issue in the entire asset class, at 131.90 bid, 132.20 offered.

On Friday afternoon a trader had spotted the Brazil 2040 at 132.05 bid.

The market source on Monday said that given the recent burst of issuance in both sovereigns and corporates the market may be positioned for some spread widening in advance of the long holiday in the States.

Evraz down on acquisition

Russia's Evraz Group announced on Monday that it has entered in a definitive agreement under which it will acquire Oregon Steel Mills for $63.25 per share, or approximately $2.3 billion.

A newly formed Evraz subsidiary will tender for Oregon Steel's common shares next week.

Later on Monday Standard & Poor's lowered its outlook on Evraz to negative from stable, while affirming the Russian steel and mining company's BB- corporate credit and senior unsecured debt ratings, as well as the ruAA- Russia national-scale rating on Evraz and Mastercroft.

S&P said that the outlook revision reflects its expectation that Evraz's financial profile will deteriorate as a result of this mostly debt-financed acquisition and that Evraz's flexibility under the existing rating will be materially reduced.

A market source said that the Evraz 10 7/8% secured paper maturing in March 2009 traded at 108.78 bid 110.03 offered on Monday, down 0.10 from last Friday.

Meanwhile the longer-dated Evraz Group 8¼% notes due October 2015 were at 100.75 bid, 102 offered on Monday, down 0.15 from Friday's 101.38 bid, 102.63 offered.

Shimao tightens talk

The effort to clear the new deal calendar continued as the Thanksgiving week got underway.

Although no issues were priced, news did circulate on some pending corporate issues.

Shimao Property Holdings Ltd. lowered price talk on its $500 million two-part offering of senior notes (Baa3/BB+).

The Shanghai-based real estate developer talked its 10-year fixed-rate notes at 8%, revised from the 8¼% area. Meanwhile Shimao talked its five-year floating-rate notes at Libor plus 195 to 200 basis points, revised from 200 to 225 basis points.

Tranche sizes remain to be determined.

An informed source told Prospect News that there is a slight chance that the deal could be upsized.

Pricing is expected on Tuesday.

The deal, which is being led by Morgan Stanley and Goldman Sachs, is expected to price on Tuesday.

Kookmin also tightens

Elsewhere South Korea's Kookmin Bank also reduced price talk on its five-year dollar-denominated floating-rate notes offering to Libor plus 25 to 26 basis points from the Libor plus 27 basis points area.

The deal, which is being led by BNP Paribas, Citigroup, Goldman Sachs & Co. and HSBC, is expected to price on Tuesday.

MHP sets talk

Ukrainian poultry producer Myronivsky Hliboproduct (MHP) talked its dollar-denominated offering of five-year notes (B2) at a yield of 10¼% to 10½% on Monday.

The Morgan Stanley-led deal is expected to price on Wednesday.

In addition to the above, Kazakhstan's Kazkommertsbank is expected to price its benchmark-sized offering of 10-year dollar-denominated notes (Baa1/BB+/BB+) via Credit Suisse and ING before the Wednesday close. Last week the notes were talked at the 7¾% area.

And CJSC Russian Standard Bank is expected to price its dollar-denominated offering of 10-year fixed-rate loan participation notes (expected ratings Ba3/B-), via Citigroup and ING.

Those notes are talked at 9½% to 9¾%.

Russian banks unveil deals

A pair of corporate issuers from Russia's financial sector rolled out offerings on Monday.

Bank Petrocommerce will begin a roadshow next Monday in Singapore for its dollar-denominated offering of three-year senior notes (Ba3/B+).

ING and Citigroup have the books for the Regulation S offering.

Elsewhere VTB24 Capital Plc, the core subsidiary of Russia's Vneshtorgbank, will begin a roadshow on Thursday in Hong Kong for its dollar-denominated offering of loan participation notes (A2/BBB+BBB+) that are expected to feature a three-year maturity.

Citigroup, Deutsche Bank and JP Morgan are joint bookrunners.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.