Turkey, Mexico price 10-year notes; TSKB brings deal; Venezuela defaults on more notes

By Rebecca Melvin

New York, Jan. 9 – The emerging primary market remained strong on Tuesday with another handful of deals coming at terms that were mostly tight to initial talk.

“The market tone is a carryover from last year, with a push to get things done, and at competitive pricing,” a New York-based market source said.

Turkey announced and priced $2 billion of 10-year notes to yield 5.2%. The Securities and Exchange Commission-registered notes came at targeted price guidance via joint bookrunners Citigroup, Deutsche Bank Securities and HSBC and with a coupon of 5 1/8%.

Turkey’s Turkiye Sinai Kalkinma Bankasi AS priced $350 million of 5½% five-year notes at mid-swaps plus 325 basis points, which was the tight end of revised talk in the mid-swaps plus 340 bps area.

Mexico announced and priced €1.5 billion 1¾% notes due 2028 to yield mid-swaps plus 85 bps.

Meanwhile, more Latin America deals were on tap for pricing on Wednesday including Rumo SA, Nemak SAB de CV and possibly Marfrig Global Foods SA, which wraps up a roadshow on Wednesday.

Mexico’s euro deal came fast on the heels of the sovereign’s dollar-denominated debt priced last week.

It is likely that the government is looking to prefund before campaign mode kicks in, a market source said. Presidential elections will be held this summer in Mexico, and the markets tend to get volatile the closer elections come, the source said.

Meanwhile, Venezuela reached technical default on another bond after it failed to make a $45 million coupon payment for its 2020 global bonds on Monday, which marked the end of a 30-day grace period for the payment.

S&P lowered its issue rating on the 2020 bonds to D from CC, and noted that there are now eight Venezuelan issues with overdue coupons.

Those bonds include $2.496 billion 7¾% bonds due Oct. 13, 2019; $2.496 billion 8¼% bonds due Oct. 13, 2024; $1.6 billion 7.65% bonds due April 25, 2025; $3 billion 11¾% bonds due Oct. 21, 2026; $2 billion 9% bonds due May 7, 2023; $2 billion 9¼% bonds due May 7, 2028; $1 billion 7% bonds due Dec. 1, 2018; and $1.5 billion 6% bonds due Dec. 9, 2020.

“The Venezuelan bond market has been virtually at a standstill as these technical defaults have occurred. There is not much communication, and bond holders hope that the government is going to pay as promised,” a New York-based market source said.

“But the government seems to be kicking the can down the road, hoping some kind of miracle will happen so that it will be able to fix the economy and not really address the main issues provoking the problem,” the source said.

© 2015 Prospect News.
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