Market conditions ‘supportive’ for EM; Unifin prices; Dubai Islamic Bank eyes notes

By Rebecca Melvin

New York, Jan. 24 – Market conditions were supportive for emerging market credit on Wednesday with a lower U.S. dollar boosting spreads and with U.S. stocks and gold higher, a London-based trader said.

It’s “all pretty supportive,” the trader said.

There was a little softness seen in some lower beta names given higher rates at around 2.66% for the U.S. Treasury 10-year benchmark bond, the trader added.

PJSC Polyus’ notes, which were announced earlier in the week, were expected to price later Wednesday.

The new Rule 144A and Regulation S issue of the London-based gold producer is being issued by Polyus Finance plc and guaranteed by Polyus and JSC Polyus Krasnoyarsk.

Deutsche Bank AG, London Branch, J.P. Morgan Securities plc and SIB (Cyprus) Ltd. are acting as joint bookrunners in connection with the offering, together with Gazprombank, which is joint lead manager.

Meanwhile, Dubai Islamic Bank PJSC announced plans for a benchmark-sized and dollar-denominated five-year Islamic bond.

The bank named Bank ABC, Dubai Islamic Bank, First Abu Dhabi Bank, HSBC, JPMorgan, KFH Capital, Sharjah Islamic Bank and Standard Chartered Bank as joint lead managers and bookrunners of the Regulation S notes to be priced under the bank’s $4 billion trust certificate issuance program.

A sukuk may be priced following investor meetings Jan. 29, subject to market conditions.

In Latin America, Mexico’s Unifin Financiera, SAB de CV Sofom ENR priced $250 million of 8 7/8% subordinated perpetual notes at par.

Pricing of the Rule 144A and Regulation S notes came below initial price talk in the area of 9¼%.

The perpetual notes are non-callable for seven years and then are callable every five years thereafter.

Latin America elections

Meanwhile market players eyed news on the political front in Brazil and Venezuela. In Brazil, uncertainty built on Wednesday after Luiz Inacio Lula da Silva, saddled with corruption charges but currently leading polls among potential candidates in the nation’s October presidential elections, lost a highly anticipated appeal to overturn the conviction.

The former president is technically blocked from running for office under the nation’s Clean Record law, which forbids convicted criminals from seeking election. But da Silva, a popular leftist politician, has denied the charges and his lawyers say they intend to fight the decision.

Brazil’s Supreme Court can overrule the appeals court decision. But the situation raises political uncertainty as some view da Silva the biggest political risk of 2018 and a lack of other potential candidates are seen entering the field.

Da Silva, who was president of Brazil from 2003 to 2010, was convicted last year for accepting a bribe in the far-reaching Car Wash corruption scandal. Current Brazilian president Michel Temer was also charged with taking bribes in the Car Wash case. And Temer also denied the charges and remains in office.

Meanwhile, Venezuela, which is in default on eight international bonds, announced that it will hold presidential elections before the end of April – which is sooner rather than later, and viewed as an attempt by the government of president Nicolas Maduro to consolidate power further during a time of severe economic duress for the country and increasing pressure from international sanctions against his administration.

The announcement caused Mexico’s foreign minister, Luis Videgaray, who is mediating talks between the Maduro administration and the opposition party, to step down from his role.

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