Market slowly comes back to life; DBS Bank, Czech Republic, Lithuania price; volumes thin

By Christine Van Dusen

Atlanta, Sept. 7 - After a long holiday weekend, emerging market issuers and investors on Tuesday slowly shook off the summertime doldrums and eased back into business with light volumes and a dribble of activity from the new issue pipeline.

Also keeping things from going full-bore were investors' worries about the stability of the European banking industry and concerns that earlier optimism about the better-than-expected payroll numbers out of the United States was misguided.

That meant that things in the secondary market on Tuesday were "very, very quiet," a New York-based market source said. "It's a little sloppy, with equities down, but there's nothing much to speak of. Prices have generally been unchanged."

Brazil and Mexico "have been trading in light volume in a tight range, with spreads moving with the Treasury moves," he said. "It's just been relatively uneventful."

The Mexico 2020 bonds were 107¾ bid, 108¼ offer on Tuesday. And the Brazil 2019s were 114.90 bid, 115.40 offer. "They're kind of just sitting there," he said. "There's not a lot of trading or price movement."

This was due in part to post-Labor Day malaise and also the fact that Rosh Hashana and Yom Kippur are coming up. "That takes a lot of people out of the market," he said.

Some deals get done

On the primary side, "there's been a new issue here and there," a market source said. "There are some new issues coming to market right now. It's kind of dribbling back in, but next week will be busy for sure."

Among the deals that priced on Tuesday was Singapore-based financial services group DBS Bank Ltd.'s $1 billion 2 3/8% notes due Sept. 14, 2015 at 99.691 to yield Treasuries plus 100 basis points, an informed market source said.

DBS, Bank of America Merrill Lynch and Barclays Capital were the bookrunners for the Regulation S-only transaction, which was talked at Treasuries plus 100 bps to 105 bps.

The notes were met with high demand, a market source said. "It went very well."

Also receiving solid demand was the €2 billion issue of 3 5/8% notes due April 14, 2021 from the Czech Republic, which priced at 99.309 to yield mid-swaps plus 105 bps, a market source said.

Barclays Capital, Deutsche Bank and Erste were the bookrunners for the deal, which received more than €5 billion in bids.

This helped set the stage for Lithuania to price $750 million 5 1/8% bonds due Sept. 14, 2017 at 99.281 to yield 5.249%, or Treasuries plus 320 bps, a market source said.

Barclays Capital, HSBC and RBS were the bookrunners for the Rule 144A and Regulation S transaction, which was marketed on a European roadshow that started Aug. 30.

Issuers move forward

Also from Lithuania, lender AB Bankas Snoras mandated Commerzbank AG as the bookrunner for a possible issue of euro-denominated notes that will be marketed on a roadshow in Europe beginning Sept. 13, a market source said.

The day also saw Montenegro's planned €200 million notes due 2015 whispered with a yield in the low 8% area, a market source said.

Credit Suisse and Deutsche Bank are the bookrunners for the Regulation S-only deal, which was marketed on a European roadshow that started Aug. 31 and is expected to price this week.

And Brazil-based business conglomerate Odebrecht Finance Ltd. upsized its planned issue of perpetual step-up notes to $500 million from $250 million, according to a market source.

Credit Suisse and Banco Itau are the bookrunners for the Rule 144A and Regulation S deal, which is non-callable for five years. Proceeds will be used to refinance the company's outstanding 9 5/8% perpetual notes and other debt.

Also on Tuesday, Kuwait-based lender Burgan Bank SAK mandated JPMorgan, Morgan Stanley and Standard Chartered Bank for a roadshow starting Thursday, a market source said.

The investor meetings will be held in Asia, Europe and the Middle East.

Gazprom, others plan notes

Russia-based energy giant OAO Gazprom is planning a dollar-denominated offering of bonds, a market source said Tuesday.

Calyon and JPMorgan are the bookrunners for the deal, which could total as much as $1 billion and is expected to come to market in November.

Another deal that's expected to come to market soon is the planned benchmark-sized issue of senior unsecured notes due October 2020 from Brazil-based telecommunications company Telemar Norte Leste SA.

That issue - via Bank of America Merrill Lynch, BNP Paribas, BTG Pactual and Itax - could come to market as soon as Wednesday.

Market-watchers also were whispering about a possible deal from AREIF (Singapore I) Pte Ltd. and a resumption of plans for up to $400 million in three-year notes from Russia-based commercial bank Transcreditbank via JPMorgan and BNP Paribas. That deal is expected to price before the end of 2010.

The same can't be said for the Republic of Sudan. The sovereign is delaying plans for a $300 million sukuk issue of notes until 2011, a market source said.

No other details were available Tuesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.