New Gazprom edges higher; Cencosud notes slip below par, new Buenos Aires paper quiet

By Rebecca Melvin

New York, July 13 – New deals in emerging markets put in a mixed performance on Thursday as Russia’s new PJSC Gazprom bonds edged up on their market debut while Chile’s Cencosud SA slipped in a hiccup linked to investor indigestion over the larger-than-expected deal size, market sources said.

Gazprom’s newly priced 2½% notes edged up after the Moscow-based natural gas producer priced CHF 500 million of the five-year loan participation notes at par. They traded around 100.5, to as high as 100.8, a London-based trader said.

Cencosud, a retailer based in Santiago, sold $1 billion of senior notes with a 4 3/8% coupon at Treasuries plus 210 basis points. The deal was a bit meatier than the $750 million to $850 million deal size expected, a New York-based trader noted.

“Cencosud printed $1 billion, and people are still digesting it,” the trader said, putting a late market for the new paper at 99.10 bid, 99.40 offered.

Buenos Aires priced €500 million of 5 3/8% 5.5-year notes that weren’t heard trading in the secondary after terms were fixed.

A trader noted that Argentina credit overall was a little weaker on the day, and the province’s euro-deal, which priced at 99.455 to yield 5½%, or mid-swaps plus 512.3 bps, was a little tight compared to talk.

The notes were talked at a 5½% to 5¾% yield.

Meanwhile, a deal by Kazakhstan's Nostrum Oil & Gas LP on the calendar and eyed for possible pricing on Thursday was pushed to next week’s dealings, a syndicate source said.

Also in the primary market, West African Development Bank announced it was readying to market a possible dollar benchmark offering of seven- or 10-year senior notes starting Friday.

The regional bank, based in Lome, Togo, mandated Citigroup, JPMorgan, Natixis and Standard Bank to arrange the investor meetings in London and the United States.

Back in established issues, deal flow was OK but not great. There was a better bid in Qatar and Turkey sovereigns as well as Turkish banks, a trader said.

There continued to be buyers of Qatari credit, and Turkish banks were well bid, with both the sovereign and banks 5 bps to 10 bps tighter on the day, the trader said.

The space was holding in well despite rates settling off, he said. “There was some paper coming out of ETFs, but the market was generally subdued, and there were not huge flows.”

Meanwhile, crude oil prices, which were in the green, provided some lift to emerging markets debt.

Although volume was low, Venezuela saw a better tone with oil here, a trader said.

Venezuela and Petroleos de Venezuela SA were called higher by 0.5 point, following oil upward.

The price for U.S. benchmark crude oil for August delivery was up 61 cents, or 1.3%, last at $46.10 per barrel on the Nymex.

Market players were watching political developments in Venezuela, where the opposition plans to hold a vote on Sunday to reject president Nicolas Maduro’s plan to install a special assembly with broad powers such as authority to rewrite the country’s constitution and possibly dissolve the national legislature.

The opposition’s vote is expected to show strong disapproval of Maduro’s power and undermine his legitimacy prior to the government’s June 30 vote to approve the assembly.

According to polls, 80% of Venezuelans are against Maduro’s plan.

In Argentina, the credit market was a little bit weaker, but mostly unchanged, with nothing notable about flows or pricing.

It was a quiet day, a trader said, quoting the Argentina century bond at 91½ bid, 92¼ offered, or down about 0.5 point from its high mark on Wednesday.

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