Paraguay’s Telecel prices; new Klabin notes weaker; stronger flow eyed for next week

By Rebecca Melvin

New York, March 29 – The emerging markets debt market ended the week, month and quarter on solid footing although this week’s tone was decidedly weaker than the previous one, according to market sources.

“I think the shift this week was a function of global economic growth worries related to the weaker manufacturing [data] in the U.S. and Europe, which added to investor worries, and the rate inversion last Friday that led to risk-off sentiment,” a New York-based market source said.

Nevertheless, word on pricing of Telefonica Celular del Paraguay SA’s (Telecel) $300 million of 5 7/8% notes hit the tape after the 2027 notes priced at par. The proceeds will be used to finance the company’s tender offer for its 6¾% notes due 2022.

Telecel is a communications company based in Fernando de la Mora, Paraguay.

Telefonica Peru is a second telecommunications company on the calendar for pricing for the Latin American region next week.

Other than the Telefonica deal, there were no deals announced for pricing next week in Latin America, but there are deals in the pipeline that might mean a busy week, the market source said.

Conversations among market players suggest that it could be crowded, the source said.

In addition to investors’ concerns about global economic growth, issues related to Brazil’s pension reform bill came to a head this past week, which “leads to less credibility that the government is going to get that passed, and this was part of the story of why you would invest in Brazil,” the source said.

An ambitious pension reform bill, which is central to President Jair Bolsonaro’s political agenda, has been beset by government infighting and struggling to get enough support to get through congress.

The new Klabin SA $1 billion of 2029 and 2049 notes were a casualty of this week’s pension headlines and the generally weaker market overall. The Sao Paulo based pulp and paper company’s new 7 1/8% notes due 2029, which was a deal of $500 million size, were recently seen off by 1/8 point at about 99.5 after the deal priced at 99 5/8.

The Klabin notes were slightly weaker, but “the deal did well considering a market backdrop that was not the best,” a New York-based source said.

It was a decent price for them, and in line with comparable Suzano Papel e Celulose SA, another Brazilian pulp and paper company, the source said.

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