EM investors eye new supply; RioPrevidencia announces; secondary softens in lighter flow

By Rebecca Melvin

New York, April 4 – New deal announcements continued in emerging markets on Wednesday, in continuation of Tuesday’s action when European market players returned from the Easter holiday. But the secondary market was mixed, with softening in the Central & Eastern Europe, Middle East and Africa, although Brazil was strong, market sources said.

Ukraine’s Metinvest BV was talking its planned notes for pricing later in the day. Guidance on the dollar-denominated five-year tranche was tightened to yield of 7 7/8% to 8% from initial talk in the 8% area; and guidance on the eight-year notes was tightened to 8 5/8% to 8¾% from initial talk in the mid- to high-8% range.

Deutsche Bank AG, ING Bank NV, Natixis, and UniCredit are bookrunners of the Rule 144A and Regulation S notes, which ware pricing concurrently with a tender on the company’s 2021 notes.

In Latin America, Brazil’s RioPrevidencia announced it has selected banks and scheduled a roadshow to market a dollar-denominated 10-year note, seen pricing next week subject to market conditions, a market source said.

BB Securities and BNP Paribas are bookrunners for the public pension fund for the Rule 144A and Regulation S deal.

The RioPrevidencia deal followed on the heels of a deal for Buenos Aires Province, which announced a seven-year peso-denominated floating-rate note on Tuesday.

But a rally in existing paper that marked month-end and quarter-end last week has not spilled into the new week, a market source said. Spreads are generally mixed, with Turkey being among the underperformers as investors sat back to wait for new supply.

In Latin America, Brazil was an outperformer in terms of secondary market action. Both sovereign and corporate Brazil credits were active and rallied on Wednesday, a New York-based trader said.

The Latin America market had not sold off severely in early action despite a terrible market tone at the New York open when U.S. equities plunged amid jitters over a potential trade war between China and the United States. China said that it would retaliate against the Trump administration’s tariff threats with tariffs of its own on $50 billion of U.S. products. But after hitting an early low, U.S. equities rallied up the rest of the session as market players chalked up the trade talk as negotiating tactics.

The Dow Jones industrial average moved 750 points off its low point of the day. The S&P 500 stock index ended up 30.24 points, or 1.2% to 2,644.69.

Despite the whipsaw stock action, there are rumors of new deals coming in the Latin America debt capital market. That market is described as stable if not as favorable for issuers concession-wise than it was late last year and early this year.

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