Emerging markets see pricing from VimpelCom, Afreximbank, PetroPeru, Dominican Republic

By Rebecca Melvin and Colin Hanner

New York, June 13 – Emerging markets were awash in new paper on Tuesday, a day ahead of an expected rate hike by the U.S. Federal Reserve that could raise the U.S. target interest rate to 1% to 1¼%.

Terms materialized for a VimpelCom Holdings BV deal, which has been in the works along with a tender offer since May 30. Vimpelcom launched $1.5 billion of notes in two tranches of four and seven years. The coupon for the shorter-dated paper was 3.95% and for the longer-dated tranche was 4.95%, according to a syndicate source.

VimpelCom is a subsidiary of the Amsterdam-based telecom and digital services provider VEON Ltd.

African Export-Import Bank (Afreximbank) priced a $750 million deal of seven-year notes at 99.459 to yield 4.215%, or mid-swaps plus 220 basis points, a market source said.

Price talk for the bonds (Baa1//BBB-) was in the mid-swaps plus 230 bps area, which was revised from earlier talk in the mid-swaps plus 250 bps area.

In Asia, the Hong Kong-based financial conglomerate in China, China Everbright Bank Co. Ltd., priced $500 million three-year floating-rate notes and Hong Kong-based property development company Shui On Land Ltd. sold $600 million 6.4% senior perpetual capital securities at par. Both deals priced on Monday.

On Tuesday, the Hong Kong-based investment holding company focused on development of Chinese medicine, China Traditional Chinese Medicine Holdings Co. Ltd., said it issued RMB 2 billion of 4.98% three-year notes, while Shenzhen, China-based China Merchants Bank Co., Ltd. sold $800 million three-year floating-rate notes.

In Latin America, the Republic of Chile priced $1.243 billion of 3.86%, 30-year senior notes at 99.841 to yield 3.869%, and the sovereign also priced a €700 million tap of its outstanding 1 7/8% euro-denominated notes due 2030. The tap was reoffered at a price of 103.972 to yield 1.534%, according to a syndicate source.

The new dollar deal came at a spread of 100 bps over 30-year Treasuries, and the euro-deal priced with a spread of mid-swaps plus 50 bps.

Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC were joint lead managers and bookrunners for the deals.

Proceeds of the dollar-denominated notes will be used for general budgetary purposes, the general purposes of government and to partially pay for some outstanding debt as part of a concurrent tender offer.

Proceeds from the euro-denominated notes are earmarked for general budgetary purposes.

The Dominican Republic launched and priced an offering of $500 million 5.95% 10-year notes (B1/BB-/BB-). That deal was sold via bookrunner Stifel, Nicolaus & Co., Inc., Jefferies LLC and Drexel Hamilton, LLC. But details could not be obtained by press time.

Proceeds of the deal will go toward financing the remainder of costs of construction of a new thermal power plant in Punta Catalina, Bani.

Meanwhile, $2 billion of Petroleos del Peru SA notes debuted in the secondary market after pricing late Monday, with the longer-dated 30-year tranche trading higher after market, a New York-based trader said.

Petroperu priced 4¾% notes due 2032 for $1 billion and 5 5/8% notes due 2047 for $1 billion, both at par.

Brazil’s credit markets, which did not see any new paper, tried to open much stronger, but most of the best bids got hit. It was still better bid than on Monday, however, a London-based trader wrote in a note.

Overall, however, secondary market action was muted, one trader said. Testimony before a senate panel by U.S. Attorney General Jeff Sessions attracted a lot of attention Tuesday afternoon. Sessions said he never spoke with or colluded with Russian officials to interfere with the 2016 presidential campaign.

Meanwhile, U.S. Treasuries rebounded, buoyed by a strong 30-year auction, after selling hit the market earlier in the day, after data showed wholesale inflation rose to a five-year high.

Yield on the benchmark 10-year Treasury notes slipped to 2.206% compared to 2.215% on Monday, trading near its 2017 low on June 6 of 2.147%.

The Federal Reserve is widely expected to raise its benchmark interest rate on Wednesday for the second time this year. A two-day policy meeting will conclude Wednesday afternoon when Feb Chair Janet Yellen is slated to hold a press conference.

© 2015 Prospect News.
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