Primary market active even as economic data disappoints; Qatari Diar, CSN, VEB sell notes

By Christine Van Dusen

Atlanta, July 14 - Though economic news out of the United States was mostly ho-hum on Wednesday and yields on 10-year Treasuries fell, emerging markets issuers continued to march to market in the hopes of soaking up investors' built-up cash.

"It's been busy," a New York-based source said.

Economic news out of the United States was mixed, with business inventories rising a slow 0.1% in May, retail sales falling 0.5% in June and the Federal Open Market Committee reducing its expectations for economic growth. But none of that did much to stanch the flow of new issuance.

"The pipeline is open, and some of the cash is getting sopped up, finally," the New York-based market source said.

New issuance has increased "in the last few days to help meet demand from real money as the positive momentum from equity markets has helped risk appetite reappear," a New York-based trader said.

Qatari Diar prices

Indeed, Wednesday saw several new deals.

Qatar sovereign wealth fund Qatari Diar priced a $3.5 billion two-tranche offering of notes due 2015 and 2020 via Barclays Capital, HSBC, Qatar National Bank, Standard Chartered and RBS in a Rule 144A and Regulation S deal.

The $1 billion 3½% notes due 2015 priced at 99.252 to yield 3.665%, or Treasuries plus 180 basis points. Price talk was set at the Treasuries plus 185 bps area.

The $2.5 billion 5% notes due 2020 priced at 99.969 to yield 5.004%, or Treasuries plus 190 bps. Price talk was set at the Treasuries plus 195 bps area.

"The book was seven times oversubscribed, I was told," a London-based trader said.

"It's doing OK," a New York-based market source said at mid-afternoon. "It's up about a half a point or a quarter."

The 3½% coupon for the notes due 2015 "is not much to me," he said. "Call me old-fashioned."

CSN, VEB print notes

Also printing on Wednesday was Brazil-based steel producer Companhia Siderurgica Nacional (CSN) with $1 billion 6½% notes due 2020 at 99.096 to yield 6 5/8%, or Treasuries plus 357.7 bps, a market source said.

BB Securities, HSBC, Itau, Morgan Stanley and Santander were the bookrunners for the Rule 144A and Regulation S offering, which was talked at 6½%.

The notes will be issued through subsidiary CSN Resources SA and guaranteed by CSN.

Proceeds will be used for general corporate purposes, according to a Fitch Ratings report.

And Russia's Vnesheconombank (VEB) priced a $600 million add-on to $1 billion 6.902% notes due 2020 at 102.176 to yield 6.6%, or Treasuries plus 350.3 bps.

Barclays, Citigroup, Societe Generale, ING, Troika Dialog and VTB Capital were the bookrunners for the Rule 144A and Regulation S deal.

PTTEP, Banorte price

In another new deal, PTTEP Australia International Finance Pty Ltd. priced $500 million 4.152% notes due 2015 at par to yield Treasuries plus 230 bps, an informed market source said. The issuer is a unit of Bangkok-based PTT Exploration and Production PCL.

RBS and Credit Suisse were the bookrunners for Rule 144A deal, which was talked at Treasuries plus 230 to 240 bps.

Proceeds will be used for general corporate purposes and for funding the company's Montara project in Australia.

And Mexico-based lender Banco Mercantil del Norte SA priced $300 million 4 3/8% senior unsecured notes due 2015 at 99.725 to yield 4.437%, or Treasuries plus 262.5 bps.

Naspers on roadshow

Also on Wednesday, South African media company and pay-television provider Naspers Ltd. mandated Citigroup, Barclays Capital and JPMorgan for a planned benchmark-sized offering of long-term senior unsecured notes, according to a market source.

The Rule 144A and Regulation S offering will be marketed during a roadshow in Europe, the United States and Asia. The transaction is expected to follow soon after, subject to market conditions.

Proceeds will be used for general corporate purposes and to repay borrowings under the company's revolving credit facility, according to a Moody's Investors Service report.

Trading firm

In the secondary market, the tone was "firm" on Wednesday, the New York-based trader said.

Among corporates, the $300 million 9¼% notes due 2020 from Brazilian airline Gol Linhas Aereas Inteligentes SA - which priced Tuesday at 99.409 to yield 9½%, or Treasuries plus 638.5 bps - opened at 99.70 bid, 99.90 offer.

Mexico-based petroleum company Petroleos Mexicanos SAB de CV (Pemex) saw its $2 billion 5½% bonds due 2021 that priced Tuesday at 99.011 to yield 5.65%, or Treasuries plus 250 bps, open at "99.35 bid, 99.55 offer," the New York trader said.

That deal "has done fantastically, relative to the market," the New York-based market source said.

For sovereigns, the market traded "higher and tighter" in the first few hours of the morning in London but "pulled back" as the day went on, the New York trader said.

The Markit iTraxx Sov-X CEEMEA index spread was almost unchanged, at 222 bps, he said.

What market-watchers are now waiting for is the latest economic data from China, the New York-based market source said.

"That should be the driver going forward," he said. "People are hanging their hats on China. If GDP is weaker than expected, then I expect to see profit-taking and things of that nature, with guys back on the sidelines and reassessing global growth for the second half of the year."

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