VimpelCom, PCD Stores, CAF print notes on upbeat but slow day for EM; Sulfindo delays deal

By Christine Van Dusen

Atlanta, Jan. 26 - Risk appetite got a small boost on Wednesday after the Federal Open Market Committee's statement that it would likely continue its bond-buying program given the current pace of economic improvement in the United States.

The day also saw commodity prices rise, giving emerging markets a lift, and three issuers brought new deals: Russia's VimpelCom Communications OJSC, China's PCD Stores Group Ltd. and Venezuela's Corporacion Andina de Fomento.

But for the most part, the day was slow for emerging markets assets.

"External debt markets have seen little action," according to a report from RBC Capital Markets.

A market source agreed: "It's extremely quiet. Even the higher betas are almost unchanged today."

The JPMorgan Emerging Markets Bond Index Plus spread started the day 3 basis points tighter, "bang in the middle of the trading range seen over the past two to three months," RBC said.

By day's end, the EMBI+ spread was 12 bps tighter, with most sovereigns down between 5 bps and 15 bps.

VimpelCom sells notes

Most notable among the new deals on Wednesday was Russia-based telecommunications company VimpelCom's two-tranche $1.5 billion issue of loan participation notes due 2016 and 2021.

The deal included $500 million 6.493% notes due Feb. 2, 2016 that priced at par and $1 billion 7.748% notes due Feb. 2, 2021 that priced at par.

Both carried a spread of mid-swaps plus 425 bps, which was in line with price whispers of mid-swaps plus the mid-400 bps area.

Proceeds will be used for general corporate purposes and to fund a merger with Wind Telecom.

In another new deal, China-based department store chain operator PCD Stores Group priced RMB 750 million notes due Feb. 1, 2014 at par to yield 5¼%, a market source said.

HSBC was the bookrunner for the Regulation S-only notes, which include a change-of-control put at 101%.

Proceeds will be used for general working capital, to refinance existing debt and for the implementation of expansion strategies.

CAF prices tap

Wednesday also saw Venezuela-based lender Corporacion Andina de Fomento price a €250 million add-on to its 4 5/8% notes due March 29, 2018 at 98.505 to yield mid-swaps plus 175 bps, a market source said.

The notes priced near the mid-point of talk, which was set at the mid-swaps plus the 180 bps area.

BNP and HSBC were the bookrunners for the Regulation S deal.

The original issue totaled €400 million and priced Nov. 22 at 99.603 to yield 4.694%.

This followed the Tuesday pricing of El Salvador's $653.5 million notes due Feb. 1, 2021, which came to market at par to yield 7 5/8%, a market source said.

Deutsche Bank was the bookrunner for the Rule 144A and Regulation S offering.

Proceeds will be used for debt refinancing.

Also selling notes on Tuesday was Argentina-based credit card company Tarjeta Naranja SA, with $200 million senior notes due Feb. 1, 2017 coming to market at par to yield 9%, a market source said.

Bank of America Merrill Lynch and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal.

The notes are callable at par plus the coupon in 2014, par plus half of the coupon in 2015 and par plus a quarter of the coupon in 2016.

Russian issuers set guidance

In other deal news on Wednesday, Bank of Moscow talked its two-year Singapore dollar-denominated bond at a yield in the 4 3/8% area, a market source said.

ING and UBS are the bookrunners for the Regulation S-only deal. Proceeds will be used for general corporate purposes.

Also from Russia, independent gas producer OAO Novatek whispered its dollar-denominated benchmark five- and 10-year notes at the mid-swaps plus the low- to mid-300 bps area, a market source said.

BNP Paribas, Citigroup and RBS are the bookrunners for the Rule 144A and Regulation S deal, which is expected to price this week.

And Dubai-based developer Emaar Properties whispered its planned $2 billion sukuk issue of 5.5-year notes at a yield in the 8 5/8% area, a market source said.

HSBC, RBS and Standard Chartered are the bookrunners for the Regulation S-only deal.

First Citizens taps dealer

Also on Wednesday, Trinidad and Tobago's First Citizens Bank Ltd. mandated JPMorgan for a possible issue of notes and a roadshow, a market source said.

The marketing trip for the Rule 144A and Regulation S offering will begin Friday in London and travel to Boston and New York before finishing on Tuesday.

And Mexico-based construction company Empresas ICA SAB de CV's released details on its planned perpetual notes. The offering will be dollar denominated, and the notes will be non-callable for five years in a Rule 144A and Regulation S transaction, a market source said.

Bank of America Merrill Lynch, Morgan Stanley and Santander are the bookrunners for the deal, which is on a roadshow until Thursday and expected to price soon after.

Proceeds will be used to repay outstanding secured debt and for general corporate purposes, including equity contributions and for new and existing projects.

Sulfindo postpones notes

Meanwhile, Indonesia-based caustic soda and chlorine producer PT Sulfindo Adiusaha postponed its planned issue of five-year fixed-rate notes via Barclays and Standard Chartered in a Rule 144A and Regulation S offering.

No other details were available Wednesday.

Market watchers were also keeping an eye on Yemen, which could bring a sukuk issue of notes to the market sometime in the first half of this year.

This comes amid news that sukuk issuance reached $7 billion in 2010, according to research from law firm Trowers & Hamlins. In the previous year, sukuk issuance totaled $4.3 billion.

Issuance of conventional bonds also grew in the region during the year, up 16.3% to $15 billion.

"While sukuk issuance has rebounded, it is still less than half of its peak in 2007 and 2008," said Neal Downes, regional banking and finance partner in the Trowers & Hamlins' Bahrain office, in the report.

"The financial crisis was a real test for sukuk," he said. "Investors are flocking to the comparative safety of conventional bonds while issuers address some of the particular legal and structural concerns surrounding sukuk and their robustness in a default or insolvency scenario."

Many investors have historically misunderstood sukuks, assuming they automatically come with a sovereign guarantee. But now the market sees the limitations of asset-backed sukuks, Downes said.

The majority of sukuks issued during the year have been brought to market by banks, sovereigns and quasi-sovereign entities, according to the report.

© 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.