Mexico’s Engenium Capital, Brazil’s Klabin postpone new deals as investors remain cautious

By Rebecca Melvin

New York, Nov. 16 – Pricing of planned new issues for Mexico’s Engenium Capital and Brazil’s Klabin SA have been postponed as market conditions remain difficult, market sources say.

Engenium, a specialty loan and leasing company owned by private equity firm Linzor Capital Partners, had started a roadshow for a planned offering of perpetual subordinated bonds, and Klabin, the Sao Paulo-based pulp, paper and paper products company, had selected banks and scheduled fixed-income investor meetings for a dollar-denominated notes offering. They are the latest in a string of new issue casualties in recent weeks.

The postponements came against a backdrop of upset in the oil market and difficulties in the equity market, which are compounding emerging markets debt problems, New York-based EM debt strategist Michael Roche said.

But a number of other factors are playing into the equation of emerging markets primary market woes.

Part of the problem is that funding for companies and governments was delayed earlier this year when the normal pace of the new issue calendar was disrupted. This means that there is a rush to the new-issue market at a time when the market is typically quiet.

“Even on the days when conditions for bringing a new issue were marginal, [deals] were pushed through, and there was only measured success in getting the issue off,” Roche said.

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