New notes from Tigo Paraguay, Novatek, Altice, Scotiabank Peru; spreads slightly tighter

By Christine Van Dusen

Atlanta, Dec. 7 - Tigo Paraguay, Russia's OAO Novatek, Altice Financing SA/Altice Finco SA and Scotiabank Peru sold notes on Friday, ending a busy week of deals and trading for emerging markets assets as better news from Greece gave investors and issuers a bit of a boost.

Spreads were mostly tighter by the end of the week, with the Markit iTraxx SovX index spread narrowing by 3 basis points and the corporate index unchanged.

Several issuers took steps toward the market, with possible deals from the likes of South Africa's Gold Fields Ltd., Lebanon's BankMed Zambian Electricity Supply Corp. Ltd. (Zesco) and Telefonica Celular del Paraguay (Telecel).

Trading activity focused mostly on the new $2 billion two-tranche issue from Abu Dhabi National Energy Co. (TAQA), as well as the $1.5 billion issue of notes from Morocco.

Meanwhile, emerging markets bond funds took in another $1.02 billion during the week ended Dec. 5, according to data tracker EPFR Global. That is up from $804 million during the previous week.

"Yield hunger reasserted among fixed income investors itself in early December," the report said. "Emerging markets bond funds now look set to eclipse the full year inflow record of $53.288 billion set in 2010, with the last week's flows evenly divided between local and hard currency funds."

In its new deal, Tigo Paraguay, a subsidiary of Luxembourg's Millicom International Cellular SA, priced $300 million 10-year notes with a coupon of 6¾%, according to a company announcement.

The proceeds will be used for general corporate purposes, including financing investments in cable and mobile infrastructure.

Novatek does deal

Friday also saw Russia-based gas producer Novatek sell $1 billion 4.422% notes due Dec. 13, 2022 at par to yield 4.422%, or Treasuries plus 285 bps, a market source said.

The notes priced in line with talk, set at Treasuries plus 285 bps.

Barclays, Gazprombank, Goldman Sachs and Sberbank were the bookrunners for the Rule 144A and Regulation S deal.

"The current acquisition of Nortgas is generally positive for the group, strengthening its domestic position," a London-based analyst said. "We continue to view the company as an equity growth story with execution risk and exposure to regulatory changes on pricing, tariffs and taxes."

But the company also has adopted mostly conservative financial policies, she said.

"With attention to leverage and a commitment to investment-grade ratings ... we are more comfortable with the credit profile overall," she said.

Novatek bond premium 'modest'

Still, Novatek's smaller size and private ownership "require 30 bps to 40 bps spread over the quasi-sovereign Russian issuers, in our view," the analyst said.

"At this level, the new bond offers a modest 24-bps premium over Gazprom and 27 bps over Rosneft," she said.

The company's existing 2022 notes saw some good buying from Asian investors on Friday, the analyst said.

"The Street wants to sell it," she said, noting that the bonds were trading at 99.85 bid, 99.95 offered.

Scotiabank prices bonds

Scotiabank Peru sold $400 million 4½% notes due Dec. 13, 2027 at par to yield 4½%, or Treasuries plus 291.3 bps, a market source said.

The notes were talked at a yield in the 4 5/8% area.

Bank of America Merrill Lynch, Goldman Sachs and Scotiabank were the bookrunners for the Rule 144A and Regulation S deal.

The notes include a first call on Dec. 13, 2022 at par.

Scotiabank Peru is a Lima, Peru-based 97.75%-owned subsidiary of Bank of Nova Scotia.

Altice prints notes

Israel-focused Altice priced an issue of euro- and dollar-denominated notes due in 2019 and 2020, a market source said.

The deal included $450 million 7 7/8% notes due December 2019 that priced at par to yield 7 7/8%. The notes, which are non-callable for three years, were talked 7 7/8%.

The second tranche, €200 million 8% notes due December 2019, priced at par. The notes, non-callable for three years, were talked at 8%.

The $400 million 9 7/8% notes due December 2020, which are non-callable for four years, priced at par. The notes were talked Friday at 9 7/8%.

Goldman Sachs, HSBC and Morgan Stanley were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used to refinance the telecommunications company's debt and to finance the acquisition of the remaining 31% stake in Hot Mobile that Altice does not own.

Altice operates Hot Mobile, a wireless telecommunications company in Israel, and Israeli cable television company Hot.

TAQA notes active

The new $2 billion notes due Jan. 12, 2018 and 2023 from TAQA were fairly active in trading on Friday.

The Rule 144A and Regulation S deal included $750 million 2½% notes due 2018 that priced at 99.483 to yield Treasuries plus 200 bps. Those notes closed Friday about 20 bps tighter, a trader said.

The second tranche, $1.25 billion 3 5/8% notes due 2023, priced at 99.404 to yield 210 bps over Treasuries.

Those notes finished the session about 12 bps tighter.

BNP Paribas, Citigroup, HSBC and Standard Chartered were the bookrunners for the deal, which attracted $9 billion from 406 investors.

Morocco sees sellers

In other news from the secondary market, the $1.5 billion issue of notes due in 10 and 30 years from Morocco received some attention on Friday.

The sovereign priced a $1 billion tranche of 4¼% 10-year notes at 99.228 to yield 4.346%, or 275 bps over Treasuries.

A $500 million tranche of 5½% 30-year bonds priced at 97.464 to yield 5.677%, or Treasuries plus 290 bps.

"Sellers from the word 'go' on the new Morocco bonds from left, right and center," a trader said. "This obviously took the shine off the existing euro bonds, which backed off a little."

Barclays, BNP Paribas, Natixis and Citigroup were bookrunners for the Rule 144A and Regulation S deal.

Latvia returns to reoffer

Another recent deal - $1.25 billion 2 ¾% notes due 2020 from the Republic of Latvia - widened before settling in near reoffer on Friday, a trader said.

The sovereign priced the notes at 99.113 via Barclays, Deutsche Bank and JPMorgan.

In other trading on Friday, notes from Turkey corporates widened by between 5 bps and 7 bps, while notes from Ukraine widened as much as 45 bps but tightened in about 10 bps near the end of the session.

"Moody's downgraded Ukraine's sovereign rating to B3 with a negative outlook and later in the day the IMF rescheduled its Ukraine mission visit for the second half of January at the request of the Ukrainian authorities," said Svitlana Rusakova of Dragon Capital. "However, a few good offers were absorbed by the market."

Gold Fields mulls deal

In deal-related news, Lebanon-based lender BankMed launched a $500 million issue of notes due in December of 2017 at 5½%, a market source said.

The notes were previously talked at a yield in the 5½% area.

Deutsche Bank is the bookrunner for the Regulation S deal.

And South Africa-based gold mining company Gold Fields is considering an issue of notes, a market source said.

The proceeds would be used to refinance a bridge loan.

Zesco looks to issue

Also on Friday, Zambia's Zesco was considering an issue of international bonds that would come to the market soon, a market source said.

And Kazakhstan-based utility, rail and postal conglomerate JSC Samruk-Energy is putting off its planned issue of up to $680 million in notes, a market source said.

The deal could come to the market next week.

Proceeds will be used to fund the company's capital expenditure program.

Magyar notes oversubscribed

The final book for Hungary-based Magyar Export-Import Bank's $500 million issue of 5½% notes due Feb. 12, 2018 was about $2.2 billion, a market source said.

The notes priced Wednesday at 98.879 to yield 5¾% with bookrunners Jefferies and Deutsche Bank in a Rule 144A and Regulation S deal.

And earlier this week, Venezuela-based lender Corporacion Andina de Fomento (CAF) sold RMB 600 million 3.55% notes due Dec. 12, 2015 at par to yield 3.55%, a market source said.

HSBC and Standard Chartered were the bookrunners for the Regulation S deal.

Federal Grid, Citic sell notes

In another new deal this week, Russia's Federal Grid Co. of Unified Energy System priced RUB 17.5 billion 8.466% notes due March 13, 2019 at par to yield 8.45%, a market source said.

Barclays, VTB Capital, Sberbank, Gazprombank and Morgan Stanley were the bookrunners for the Regulation S-only deal.

And China-based conglomerate Citic Pacific Ltd. printed a $250 million increase of its 6.8% notes due January 2023 at 101 to yield 6.635%, a market source said.

Deutsche Bank and UBS were the bookrunners for the Regulation S deal.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.