EM active as rates, stocks, oil trade lower, but spreads steady; Emirates NBD, Chile price

By Rebecca Melvin

New York, Jan. 29 – Emerging markets were active out of the gate on Monday, but spreads were mostly steady as U.S. Treasury rates, stocks and oil traded lower. Shorter-dated paper was more susceptible to the broader market moves than longer-dated duration notes, and Gulf Cooperation Council countries were little changed despite lower oil prices, according to a market source.

Iraq was steady at 20 basis points tighter on the week with the dollar price marked 25 cents lower on the day on the 2023 and 2028 notes.

Bahrain’s 2047 notes traded in good size and closed at 98½ bid, 98¾ offered, with its spread also tighter on the month and holding steady.

Dubai’s Emirates NBD PJSC priced a CHF 235 million offering of five-year senior notes with a 5/8% coupon at 100.012 to yield mid-swaps plus 60 bps.

But the Regulation S notes were not expected to be a big feature of the day’s action as Swiss franc deals are typically targeted to Swiss banks and funds.

Also in early action, Dubai-based Shelf Drilling Holdings Ltd., an offshore rig operator, started to market a $550 million offering of seven-year senior notes (B2/B-), with pricing of a deal expected after meetings wrap up on Wednesday.

Credit Suisse Securities (USA) LLC is the lead bookrunner for the Rule 144A and Regulation S for life offering. Clarksons, DNB Markets, ING and UBS Investment Bank are the joint bookrunners.

Elsewhere, Chile announced a dollar-denominated 10-year global notes and later priced 1.015 billion of the notes with a 1.24% coupon at 99.941 to yield 3.247%, or a yield spread of Treasuries plus 55 bps, according to a market source.

Initial price talk for the sovereign’s Securities and Exchange Commission-registered notes was for a yield of U.S. Treasuries plus 75 bps area.

The deal was being sold concurrently with a tender for certain bonds.

Also in Latin America, a reopening of Brazilian airline Gol Linhas Aereas Inteligentes SA’s 7% notes due 2025 was announced. A tap heard of about $100 million in size was expected to price on Tuesday. Gol Linhas priced the initial $500 million of 7% seven-year notes on Dec. 6.

Also expected to price in the next few days is Banco Safra SA with a dollar-denominated benchmark of five-year notes, and Mexico’s Credito Real SAB de CV Sofom ER, which is expected to price a Swiss franc-denominated deal.

The yield on the U.S. Treasury 10-year benchmark on Monday hit its highest level since April 2014. It rose to as high as 2.72% before slipping back to about 2.69%. U.S. stocks fell on Monday, leaving the Dow Jones industrial average down 177.23 points, or 0.7% at 26439.48. The S&P 500 stock index also closed down, losing 19.24 points, or 0.7%, to 2,853.5,1, and Nasdaq stock index fell 39.27 points, 0.5% to 7466.51.

Crude oil prices were also under pressure, ending down three cents at $65.53 per barrel for West Texas intermediate crude oil on the New York Mercantile Exchange. And the U.S. dollar was trying to find a bottom after dropping last week, a market source noted.

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