Emerging markets see $4 billion Movil deal; Bahrain prices; RZD yield whispered at 5.9%

By Christine Van Dusen

Atlanta, March 24 - Emerging markets, which had been somewhat sleepy so far this week, started Wednesday with some jitters from Fitch Ratings' downgrade of Portugal before getting a jolt from a $4 billion three-tranche issue of notes from Mexico's America Movil SAB, market sources said.

"There was a bit of nervous selling this morning" as investors worried that Portugal's downgrade was a sign that Greece's economic troubles were spreading, a London-based trader said. "But as the day went on, the spreads started to tighten back in."

The America Movil deal can be credited with igniting investor interest. The deal included $750 million of five-year notes, $2 billion of 10-year securities and $1.25 billion of 30-year bonds, a market source said.

"That's a big one," a New York-based investing source said. "It's tied up a fair amount of my day."

Said the London trader near the European close: "It's been trading well in the secondary."

The five-year tranche was 10 basis points tighter by mid-day in New York, and the 10-year issue was about 3 or 4 bps tighter, the New York source said. The 30-year tranche, however, was unchanged.

"What we're seeing is that the five-year has bid well, the 10-year is the middle of the road and the long one is unchanged," he said. "The five-year was a much smaller issue, so that kind of took out the buyer interest in the 10-year. And the Treasury market is not great today. More people are happier with lower duration vehicles today."

Another deal of interest on Wednesday came from Bahrain, which priced $1.25 billion 5½% notes due 2020 at 97.829 to yield 5.789%, or mid-swaps plus 200 bps.

During European trading, that issue was "going quite well," the London source said. "It's trading in the gray. We're seeing how that goes. All indications are that it will trade well."

Also on radar screens was Russia's RZD Capital Ltd's planned benchmark-sized dollar-denominated issue of bonds due 2017 via Barclays, JPMorgan and VTB Capital.

The yield on the RZD offering is being whispered at about 5.9%, according to a Europe-based source. A roadshow will take place this month or next.

Emerging Europe gets funds

Also on Wednesday, data tracker EPFR released its report looking back on monthly inflows into emerging markets bond funds.

For the month ended Jan. 31, "overall exposures to Latin America fell with Emerging Europe as the main beneficiary," the report said. Emerging markets bond funds "continued rotating exposure from Russia and Brazil to smaller markets in Emerging Europe and Asia."

The funds also "narrowed the spread between their biggest country allocations and those in the middle of the pack, with the average Brazil weighting dropping to its lowest level since third-quarter 2002 and the gap between it and the 10th biggest country allocation - which stood at 10.33% going into fourth-quarter 2009 - dropping to 895 basis points," the report said.

"Emerging Europe was the biggest beneficiary of this trend: its average weighting hit an 18-month high as allocations for Turkey, Poland and Hungary all gained ground."

Movil prices multi-tranche deal

Mexico's America Movil priced a $4 billion three-tranche deal (A2/A-/A-) via Citigroup, Goldman Sachs and JPMorgan, a market source said.

The deal included $750 million 3 5/8% notes due March 30, 2015 that priced at 99.787 to yield 3.672%, or Treasuries plus 125 bps; $2 billion 5% securities due March 30, 2020 that priced at 99.356 to yield 5.083%, or Treasuries plus 140 bps; and $1.25 billion 6 1/8% bonds due March 30, 2040 that priced at 98.689 to yield 6.222%, or Treasuries plus 160 bps, the source said.

The Rule 144A and Regulation S offering was upsized by increasing the 30-year tranche from $1 billion.

America Movil is a Mexico City-based telecommunications services provider.

Bahrain prices notes

The Kingdom of Bahrain priced $1.25 billion 5½% notes due March 31, 2020 at 97.829 to yield 5.789%, or mid-swaps plus 200 bps, a market source said.

BNP Paribas, Deutsche Bank and JPMorgan were the bookrunners for the Rule 144A and Regulation S offering.

The price was talked at 210 bps over mid-swaps.

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