Sentiment positive as EM activity slows before Easter; InRetail prices $350 million deal

By Rebecca Melvin

New York, March 27 – Emerging markets enjoyed continuing good sentiment Tuesday on the back of Monday’s turnaround, and InRetail Real Estate Corp. priced $350 million of 5¾% notes due 2028 at par. But overall activity was curtailed amid the Christian holy week ahead of Easter Sunday, according to market sources.

InRetail Shopping Malls, a subsidiary of InRetail Real Estate priced the 10-year non-call five notes (expected ratings: Ba2/BB/BB+) tight compared to initial talk in the low 6% area for the Rule 144A and Regulation S notes.

An existing 2½-year InRetail note due 2021 was spotted early Tuesday at 5.08%, a New York-based source said, a level that indicated that there should be value implied there in the yield, and the issuer should be able to tighten indicated pricing when final terms were set.

The issuer took advantage of positive sentiment on Tuesday following last week’s softer market when “it felt like the world was ending,” a New York-based market source said.

With the firmer ground here, there is a good possibility that the other deals on the Latin America forward calendar could price this week, sources said. Those deals include dollar-denominated notes for Gilex Holding Sarl, Vrio Corp., a Latin America-focused subsidiary of AT&T Inc., and Minerva SA.

Minerva is a harder sell than the others related to its proposed perpetual senior notes, a source said.

If these deals are able to price, then it bodes well for the new issue window next week, heading into the second quarter. April is viewed as an opportunity to price before election season in Latin America kicks in in earnest and elevates volatility, the source said.

Colombia’s elections are scheduled to take place in six weeks, Mexico’s presidential elections will occur in July, and Brazil will hold its polls at the end of the year. Also on the calendar are presidential elections for Venezuela now scheduled for May 20.

Also in Latin America on Tuesday, the board of directors of Argentina’s Transportadora de Gas del Sur SA approved an issue of notes of up to $500 million, or its equivalent in other currencies, in one or more classes, according to a 6-K filing with the Securities and Exchange Commission.

The notes will be sold under its short- and medium-term notes global program for up to $700 million.

The issuer is a natural gas distributor.

Elsewhere, Bahrain was wrapping up a roadshow on Tuesday for a potential three-tranche dollar transaction. Spreads on Bahrain’s existing curve were mixed but improved from significant widening out in the past week.

Tunisia, which is also on the calendar for a potential new issue, saw its spreads tighter on Tuesday across its sovereign curve.

InRetail brings $350 million

Pricing of the Rule 144A and Regulation S notes was tighter than initial talk in the low 6% area. The InRetail Shopping Malls subsidiary of InRetail Real Estate priced the 10-year non-call five notes to yield 5¾%.

The notes (expected ratings: Ba2/BB/BB+) priced at par via Citigroup and JPMorgan as bookrunners.

The company also tendered for existing notes. The proceeds of the new notes will be used to refinance debt, including the $300 million of notes due 2021, to grant a $150 million loan to InRetail Peru Corp. and also for general corporate purposes.

InRetail is a shopping mall operator based in Lima, Peru.

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