Novolipetsk bond edges a bit higher after issue; Ukraine, Slovenia on tap; LatAm strong

By Rebecca Melvin

New York, Sept. 15 – OJSC Novolipetsk Steel (NLMK)’s newly priced 4% bond edged up on Friday after the Russian steel maker priced $500 million of the seven-year bonds at par.

The new Rule 144A and Regulation S notes were seen at 100.15 bid, 100¼ offered, a London-based market source said.

Another $500 million deal on Friday was priced by South American-focused agricultural company Adecoagro SA, which brought 6% 10-year senior unsecured notes at par.

Volume of new issuance in emerging markets has been strong so far this month since market players regrouped following the summer holidays. The higher volume pace was anticipated to continue next week, sources said, with something of a focus on Eastern Europe and the CIS region early in the week, with issuance expected from Ukraine, Slovenia and Russia.

Back in secondary markets, trading slowed into the weekend, but pricing remained strong, sources said.

The market is “constructive,” a London-based market source said, so new deals should continue, and the secondary should remain strong.

Economic growth in many emerging markets is expected to be better than expected for 2017. This fed into BNP Paribas’ decision to raise its global growth forecast. The bank is confident that the United States and China will remain firm while the eurozone growth forecast was raised along with that of Turkey, Poland, Brazil and Mexico.

The bank raised its eurozone forecast for this year by 0.3 percentage points to 2.2% based on a combination of strong employment and a reduced savings ratio supporting resilient consumer spending over the past quarter or two.

This trend is likely to persist in the near term, Paul Mortimer-Lee, BNP’s chief market economist and head of U.S. economics, wrote in a note published Friday.

Mortimer-Lee expects China to average 6.6% GDP in 2017 and is watching “green shoots” becoming more visible across Brazil’s economic landscape. The recession is viewed to be over in that country with growth gaining further momentum into 2018. BNP predicts Brazil to grow at 1.0% in 2017, 3.0% in 2018 and 2.5% in 2019.

Meanwhile, U.S. 10-year Treasuries are forecast to be trading at 2.25% at the end of the year, which is down from the bank’s forecast in June, when the 10-year benchmark was expected to be trading at 3.0% by the end of the year.

In Latin America, it “was a slow day” on Friday, but the market remains strong, a New York-based source said.

Venezuela and Petroleos de Venezuela SA were quiet as investors awaited word that a payment on Venezuela’s 9¼% 2027 notes due Friday had been paid.

“I assume that it will be paid,” a market source said. But heading into the payment, trading had been slow.

Reports that the sovereign had called bondholder talks this week and that Russia was expected to participate in repackaging debt did not affect market pricing, the source said.

“The real money people are not trading that much. There is marginal inflow and outflow but most people are where they want to be and it’s not changing that much,” the source said.

© 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.