Emerging markets in holding pattern; Bradesco, Digicel price; BESI plans deal; Bahrain mandates

By Christine Van Dusen

Atlanta, March 16 - Activity in emerging markets was largely on pause for most of Tuesday as investors and issuers awaited word from the Federal Open Market Committee, which met and at mid-afternoon announced that its target federal funds rate would remain unchanged and would likely stay low for a while yet, market sources said.

"It's been quiet today with the FOMC," a New York-based investment source said. "Even though it's a non-event, it's still something you look out for."

As a result, "nothing was going crazy in the secondary," he said. "The new issue market is still there, but it's nothing huge."

He pointed to a deal from Banco Bradesco, the Brazilian banking company, that on Tuesday priced $750 million of 4.1% senior notes due 2015 at 99.996 to yield Treasuries plus 175 basis points.

Also Tuesday, Jamaica-based telecommunications company Digicel Group Ltd. priced a $775 million issue of eight-year senior notes at par to yield 10½%, which was at the tight end of the 10½% to 10¾% talk.

Another new deal that could come this week: Brazilian banking company BES Investimento do Brazil SA, with a dollar-denominated, Rule 144A and Regulation S offering of senior notes due 2015 via Deutsche Bank, ES Investment and Standard Bank, according to a market source.

"They're back out on the market," the New York source said.

As for other issuers with deals expected soon - like Brazil-based beef producer Independencia Alimentos SA's $150 million senior secured notes due 2015 - "they were waiting" on Tuesday, a trading source said.

The FOMC meeting wasn't the only thing putting issuers and investors on pause on Tuesday. Many were watching the stock market for signs that the asset class was a good bet, the trader said.

"If we can break into a new range, then there's going to be another potential leg of tightening of credit and the risk trade would be back on," he said.

Also on Tuesday, The Kingdom of Bahrain mandated BNP Paribas, Deutsche Bank and JP Morgan as bookrunners for a benchmark-sized, dollar-denominated, Rule 144A and Regulation S issue of notes, according to an informed market source. The deal will be roadshowed starting Wednesday and travel through the United States, Europe and Asia.

"There should be more of a pick up of activity later in the week," a market source said.

Banco Bradesco prices

Brazil's Banco Bradesco priced $750 million 4.1% senior notes (Baa2/BBB/) due 2015 at 99.996 to yield Treasuries plus 175 basis points, according to a market source.

Goldman Sachs Group, Banco Bradesco and Banco Votorantim were the bookrunners for the Rule 144A and Regulation S offering.

The spread came at the tight end of whispers of between 175 and 187 basis points.

Banco Bradesco is an Osasco, Brazil-based bank.

Digicel a blowout

Digicel Group priced a $775 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 10 ½%, on Tuesday, according to a market source. Demand for the deal was huge, a buy-sider added,

The yield printed at the tight end of the 10½% to 10¾% price talk.

Credit Suisse, Citigroup, JP Morgan and Deutsche Bank Securities ran the books for the quick-to-market deal.

Proceeds will be used to fund the acquisition of a 100% stake in Digicel Pacific Ltd.

The issuer is a wireless communications company based in Kingston, Jamaica.

The deal played to $6 billion of orders, the buy-side source added.

However, the $775 million deal size is a bit misleading, the investor said.

"It was really a $575 million deal, if you factor in that [Digicel owner] Dennis O'Brien took down $200 million of the issue himself."

Proceeds from Tuesday's transaction will be used to fund the acquisition of a 100% stake in Digicel Pacific Ltd., which O'Brien owns.

So O'Brien will be taking some money off the table, but will also be plowing $200 million back into Digicel.

"He clearly loves the business, in part because it has made him a very wealthy man," said the investor, who had a conversation with O'Brien earlier this month at the JP Morgan High Yield Conference in Miami.

Bahrain mandates bookrunners

The Kingdom of Bahrain (/A/A) has mandated BNP Paribas, Deutsche Bank and JP Morgan as bookrunners for a benchmark-sized, dollar-denominated issue of notes, according to a market source.

A roadshow for the Rule 144A and Regulation S deal will begin Wednesday and cover the United States, Europe and Asia.

The deal will be launched subject to market conditions.

BESI plans notes

Brazil's BES Investimento do Brazil SA (Baa2/BBB-/) plans a dollar-denominated offering of senior notes due 2015 via Deutsche Bank, ES Investment and Standard Bank, according to a market source.

The Rule 144A and Regulation S offering includes a change-of-control put at 101% if BESI Portugal ceases to control BESI Brazil.

The deal could price as soon as this week.

BESI is a banking company based in Sao Paulo, Brazil.

-Paul A. Harris contributed to this report

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