New Qatar deals add; market eyes Uruguay’s new issue premium; RioPrevidencia notes jump

By Rebecca Melvin

New York, April 13 – Qatar’s newly priced notes edged up about 1/3 to ¾ of a point in secondary market trading on Friday after the sovereign priced $12 billion in tranches due 2023, 2028 and 2048 at new issue premiums of 15 bps, 25 bps and 17.5 bps, respectively, sources said.

Qatar went back-to-back with Saudi Arabia this week for $12 billion and $11 billion in triple tranches, respectively. Saudi Arabia had a two-day advantage on Qatar, but that did not dampen investor demand for the Qatar deal, which was 4.25 times oversubscribed, according to a syndicate source.

The final order book for Qatar’s paper, representing the sovereign’s first international bond issue since 2016, stood at about $51 billion, and pricing came tight to initially talked terms.

The $3 billion of Qatar’s 3 7/8% notes due 2023 priced at 99.322 to yield 4.026%, or a yield spread of 135 basis points over U.S. Treasuries, and they traded up to about 100.05 last, according to a London-based trading source. Pricing was tightened from initial talk in the area of Treasuries plus 170 bps.

The $3 billion of Qatar’s 4½% notes due 2028 priced at 99.673 to yield 4.541%, or Treasuries plus 170 bps, and they also traded up to 100.05. This tranche’s initial talk was for a yield of Treasuries plus 200 bps area.

The $6 billion of notes due April 2048 priced at par for a yield spread of Treasuries plus 205 bps, and the deal traded up to 100.65 last, the London-based source said. The 30-year tranche is a Formosa bond, with a listing on the Taipei Exchange in addition to the Luxembourg Stock Exchange, and it priced tight to initial talk at Treasuries plus 230 bps initially. (Qatar’s 2023 and 2028 bonds only have listings on the Luxembourg exchange.)

Also in the primary market, Uruguay priced $1.75 billion of 4.975% bonds due 2055 at 98.713 to yield 5.053% on Thursday, or a spread of plus 200 bps over Treasuries. According to one source, Uruguay paid a new issue concession of about 15 bps, which was about the same concession Panama paid for its deal at the outset of the week. But a second source said the concession was more like 5 bps to 10 bps depending on the value assigned to the curve extension from the U.S. Treasury 2050s.

Overall it was a strong week for sovereign issuance, with Panama wading into a muted Latin America market with a $1.2 billion tranche of 2050 bonds on Monday, and Montenegro coming on Thursday with a €500 million offering of 3 3/8% seven-yield notes that priced at 98.477 to yield 3 5/8%, or mid-swaps plus 298.1 bps. That pricing was tightened from initial talk in the high 3% area. The other euro-denominated sovereign deal this week was Egypt’s €2 billion of eight- and 12-year notes.

In secondary market trading, Latin America deals were in focus on Friday, including those of Banco do Brasil SA, Brazil’s RioPrevidencia and Mexico’s Grupo Bimbo SAB de CV.

RioPrevidencia’s newly priced 8.2% notes due 2028 traded up an outsized 3½ to 3 7/8 points after the public pension fund for Rio de Janeiro priced $600 million of the 10-year notes tight to the initial talk for a mid-8% area yield.

BanBra’s newly priced 4 7/8% notes due 2023 edged up only about ¼ point after the Brasilia, Brazil-based lender priced $750 million of the five-year notes below initial talk in the low-5% area.

Grupo Bimbo also priced $500 million of hybrids to yield 5.95% or a spread over U.S. Treasuries of 328 points. That bond was not heard in secondary market trading action.

“It was positive that so many deals got done [on Thursday],” a New York-based syndicate source, focused on the Latin America region, said. However, the source would not go so far as to say that the word “strong” applied to the LatAm debt capital market. “It’s better than before,” the source said, but the issuers “all paid pretty hefty premiums.”

But another source said, “I think the market ended on a strong footing. A flurry of EM deals priced this week, particularly from the sovereign sector and then some corporates yesterday as well. Headline concession this week was in the context of 15 bps, with Uruguay able to achieve that pricing given the scarcity value.”

“Investors continue to have cash to put to work, but at the moment, they only see value in new deals for the concession. We are not seeing any directional positioning or views on secondary market trading,” the source, based in New York, said.

Next week will bring a continuation of earnings reports that will likely set the tone in addition to geopolitical risk and trade policy developments. Headline and in particular tweet risk will continue, the source said. “So we’ll remain wary of that.”

© 2015 Prospect News.
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