Uruguay prices notes on slightly wider but higher day for EM; investors watch Yapi Kredi

By Christine Van Dusen

Atlanta, July 13 – Uruguay priced notes on a slightly wider but higher Wednesday for emerging markets assets, with five-year credit default swaps spreads for Brazil inching out while cash prices moved up on the back of a rally in U.S. Treasuries.

“The market finally got some dollar sovereign supply,” a New York-based trader said.

Mexico’s credit default swaps closed at 136 basis points from 135 bps, a New York-based trader said.

High-yield names from the region were mixed, with Venezuela moving lower on oil weakness while Argentina moved higher, he said.

Venezuela’s 2027s closed at 48.30 from 49, PDVSA’s 2017s finished at 73.20 from 73.50 and Argentina’s Bonar 2024s moved to 116.75 from 116.625. The latter sovereign’s 2026s, meanwhile, moved up to 109.25 from 108.625, he said.

“Volumes were subdued for the most part, with two-way inquiry throughout the day,” he said.

Also on Wednesday, investors were keeping an eye on Turkey-based Yapi ve Kredi Bankasi AS’ (Yapi Kredi) new issue of $550 million 4½% notes due July 19, 2023 that priced Tuesday at 99.26 to yield 4 5/8%, or mid-swaps plus 342.6 bps.

On Wednesday morning the notes moved to 98.65 bid, 98.75 offered, a trader said.

BofA Merrill Lynch, Deutsche Bank, HSBC, ING and UniCredit were the bookrunners for the Rule 144A and Regulation S deal.

“Some early flow in the new Yapi as some nervous hands decide their allocation was a little too good,” he said.

Uruguay prints taps

In its new deal, Uruguay priced $1.15 billion of taps of its 4 3/8% notes due Oct. 27, 2027 and 5.1% notes due June 18, 2050, a market source said.

The deal included $400 million notes due 2027 that priced at Treasuries plus 205 bps and $747 million notes due 2050 that priced at Treasuries plus 275 bps.

The original $700 million issue of 2027 bonds priced on Oct. 27, 2015. The sovereign printed a total of $3.2 billion of the 2050 notes on June 18, 2014 and Feb. 26, 2015.

Barclays, BNP Paribas and JPMorgan were the bookrunners for the Securities and Exchange Commission-registered deal.

“That curve does underperform in the low-beta space, but it is taken in stride as levels bounce off the lows of the day to finish 50 cents to 75 cents lower,” a trader said.

Credito Real guides bonds

Mexico’s Credito Real SAB de CV, Sofom, ENR set initial talk in the mid-7% area for a benchmark-sized issue of dollar-denominated bonds due in seven years, a market source said.

The proceeds will be used for general corporate purposes, to fund a tender offer for its 2019 notes and to repay certain indebtedness.

Other details on the Rule 144A and Regulation S deal were not immediately available on Wednesday.

Credito Real is a Mexico City-based consumer financing services company.

Frasers deal draws orders

The new issue from Singapore’s Frasers Centrepoint Trust – $200 million 2½% notes due July 21, 2021 that priced Tuesday at 98.591 to yield 2.804%, or Treasuries plus 175 bps – drew a final order book of about $700 million from 33 accounts.

OCBC Bank was the bookrunner for the Regulation S deal.

About 67% of the orders came from Singapore and 33% from others, with banks picking up 59%, fund managers 27% and private banks 14%.

Frasers Centrepoint, a subsidiary of Frasers and Neave, Ltd., is a residential property developer and retail mall owner and operator in Singapore.

Issuance from State Transport

On Tuesday, Russia’s State Transport Leasing Co. – via GTLK Europe Ltd. – priced a $500 million issue of 5.95% notes due July 19, 2021 at par to yield 5.95%, a market source said.

JPMorgan, Renaissance Capital, UBS and VTB Capital were the bookrunners for the Regulation S deal.

Salekhard-based State Transport supplies machinery for the landscaping, aviation, water transport and rail industries.

Demand for KT

South Korea-based KT Corp.’s new issue of $400 million 2½% notes due July 18, 2026 that priced on Tuesday at 99.229 to yield Treasuries plus 110 bps saw an order book of $3.3 billion from 147 accounts, a market source said.

Asian investors bought 65%, U.S. investors 23% and European investors 12%. Asset and fund managers picked up 48%, insurers 29%, banks 18%, central banks and pension funds 3% and private banks 2%.

BNP Paribas, BofA Merrill Lynch, Citigroup and Nomura Securities were the bookrunners for the Rule 144A and Regulation S deal.

KT is a Seongnam, Korea-based telecommunications provider.

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