Hyundai, Banco BMG price deals; Lukoil, CMPC launch; funds see $569 million inflows

By Paul A. Harris

St. Louis, Oct. 29 - Emerging markets debt moved higher during the U.S. market session, according to a market source, who said that the move came on the back of a stock market rally that was spurred by stronger-than-expected growth in U.S. gross domestic product.

And $569 million flowed into the dedicated emerging markets bond funds during the week to Wednesday, according to data service EPFR Global.

However earlier it was a different story in Europe, which saw widening during its Thursday session.

At the European close Brazil's five-year credit default swaps were at 141.18 basis points mid, 4.79 bps wider on the day.

Other CDS spreads and changes included Mexico at 177.11 bps mid, 8.46 bps wider, and Russia at 196.215 bps mid, 12.55 bps wider.

Among high-yield sovereigns, Argentina's five-year CDS closed the European session at 1,002.28 bps mid, 3.46 bps wider, and Venezuela at 1,029.64 bps mid, 15.72 bps wider

Among Russian benchmark corporate names, OAO Gazprom five-year CDS closed the European session at 256 bps mid, 14.8 bps wider, and VTB Bank closed at 352.39 bps mid, 11.83 bps wider.

Hyundai prices $500 million

In the primary market Korea's Hyundai Capital Services Inc. priced $500 million of notes in a Rule 144A private placement on Thursday.

The notes were sold from company's $3 billion medium-term note program.

The 6% notes (Baa2/BBB/) were priced at 99.543 to yield 6.022%. The spread came in at 369.4 basis points over Treasuries. The notes are due May 5, 2015.

Citigroup Global Markets Inc., Deutsche Bank, Goldman, Sachs & Co., J.P. Morgan Securities Inc., Morgan Stanley & Co. Inc. and Royal Bank of Scotland were the joint bookrunners.

Banco BMG prices at talk

Elsewhere Brazil's Banco BMG priced a $300 million issue of 9.95% 10-year unsecured subordinated tier II notes (Ba3/B) at 98.15 to yield 10¼% on Thursday.

The yield printed on top of the price talk.

Morgan Stanley, Santander, UBS Securities and BTG Pactual ran the books for the Rule 144A/Regulation S deal.

Lukoil launches $1.5 billion

Meanwhile Russia's OAO Lukoil (Baa2/BBB-/BBB-) launched its $1.5 billion two-part notes offer.

The Moscow-based energy company launched $900 million of five-year notes to yield 6.5%, and $600 million of 10-year notes to yield 7.375%.

Barclays Capital, ING and Royal Bank of Scotland are the bookrunners for the Rule 144A and Regulation S bond offering.

CMPC launches at 275 bps

Also launching its deal Thursday was Chilean pulp and paper manufacturer Empresas CMPC SA. The company's $500 million maximum offering of 10-year senior unsecured notes (Baa2/BBB+/BBB+) was launched at a 275 basis points spread to Treasuries.

JPMorgan, Banco Santander and BNP Paribas are the underwriters.

On tap for Friday, Mexichem is expected to price its $350 million offering of 10-year unsecured notes (Ba1), according to an informed source.

Price talk is at the 8½% area.

Bank of America Merrill Lynch is the bookrunner.

The books closed on Thursday.

Funds see $569 million inflows, EPFR says

Meanwhile cash continues to pour into the dedicated emerging markets bond funds.

They saw $569 million of inflows for the week to Wednesday, according to EPFR Global.

That extends year-to-date flows to more than $4 billion, with funds investing in local currency debt accounting for two-thirds of the latest inflows, EPFR added.

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