JBS units, Lithuania, Grupo Aval, Peru price bonds during slightly weaker day for EM risk

By Christine Van Dusen

Atlanta, Jan. 25 - Two units of Brazil-based JBS SA, Lithuania, Colombia's Grupo Aval Acciones y Valores SA and the Republic of Peru priced notes on a Wednesday that started off bullish but weakened slightly for emerging markets debt after the Federal Reserve said it would keep interest rates at low levels for another two years.

The surprising move had investors concerned that the United States' economic recovery could take longer than expected.

The Markit iTraxx SovX index spread started the day 8 basis points tighter, and the JPMorgan Emerging Markets Bond Index Global spread finished Wednesday 3 bps wider.

"After a pause yesterday, it's back to bull party today with an early morning round of lifting in all the benchmark assets," a London-based trader said during the European morning.

Russia's 2030s, Vimpelcom's 2022s, Israel's 2022s, Turkey's 2022s and Ukraine's 2020s were all 1/4- to 1/2- point firmer.

In early trading on Wednesday, South Africa's bonds remained firm. "They have had a very solid move over the week," another trader said.

Good interest was shown for African Export-Import Bank's 2016s.

"Nigeria was lifted early this morning, and some paper felt like it came out on Namibia in the past 24 hours," he said. "Egypt has just had one fantastic run."

But by the afternoon, flows were not as active for emerging market names, though investors had not entirely turned their back on risk.

"It's a solid market," a trader said. "Flow-wise it's not quite as active as yesterday, but there's still pretty steady flow and interest."

Middle East in focus

The trader was focused on the news that Dubai Holdings would repay its $500 million notes due Feb. 1, 2012.

"This is the first of a few decent redemptions coming due this year, and of course there are many more in the loan space," he said.

Also from the Middle East, International Petroleum Investment Co. and Abu Dhabi National Energy Co. remained rock-solid while activity for Dolphin Energy and Mubadala remained muted, he said.

"Bahrain's 2018s have been doing a lot of work recently around the 104 to 104.15 level. They cannot muster any more gains past here," he said. "Dare I say it, but the market feels like it needs some supply and issuance."

Peru prices notes

In its new deal, Peru priced $1.1 billion equivalent in taps of its 2050 and 2031 notes via Citigroup and Deutsche Bank, a market source said.

The deal included $500 million 5 5/8% notes due Nov. 18, 2050 that priced at 104.098 to yield 5.372%, or Treasuries plus 225 bps. The Securities and Exchange Commission-registered notes were talked at a spread in the Treasuries plus 235 bps area.

Peru originally sold $1 billion of the notes at 96.164 to yield 5 7/8%, or 160.3 bps over Treasuries, on Nov. 10, 2010.

The new deal also included a tap of the sovereign's existing 6.95% Peruvian nuevo soles notes due Nov. 18, 2031. The $600 million-equivalent notes priced at 100.956 to yield 6 7/8%. The Rule 144A and Regulation S transaction was talked at a yield in the 7% area.

Proceeds will be used for the general purposes of the government, including supporting the balance of payments.

JBS units do deal

In another new deal, JBS USA LLC and JBS USA Finance Inc. - units of Brazil-based JBS - priced a $700 million issue of 8¼% notes due Feb. 1, 2020 at 98.569 to yield Treasuries plus 688 bps, a market source said.

The notes were talked at 8½% to 8¾%.

JPMorgan, BB Securities, Bradesco BBI, Rabobank, Banco Santander and Wells Fargo were the bookrunners for the Rule 144A and Regulation S deal.

The Greeley, Colo.-based meat processor plans to use the proceeds to fund a distribution to JBS, as well as to repay debt and for general corporate purposes.

Grupo Aval, Lithuania price

Colombia-based banking group Grupo Aval priced a $600 million issue of 5¼% notes due 2017 at 99.458 to yield 5 3/8%, a market source said.

Goldman Sachs and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for general corporate purposes.

And Lithuania priced a $1.5 billion issue of 6 5/8% notes due Feb. 1, 2022 at 99.102 to yield 6¾%, or Treasuries plus 480.3 bps, a market source said.

Barclays Capital and BNP Paribas were the bookrunners for the Rule 144A and Regulation S deal.

Volcan sets talk

Peru-based mining company Volcan Compania Minera SA set price talk at the 5 5/8% area for its planned issue of dollar-denominated benchmark-sized notes due 2022, a market source said.

JPMorgan and Morgan Stanley are the bookrunners for the Rule 144A and Regulation S deal.

The notes are expected to price Thursday.

In other deal-related news, Ecuador is planning an offering of international bonds sometime this year, a market source said.

"There's still plenty of paper out of Latin America," a trader said.

Energa, Serbia seek to issue

Poland-based energy company Energa is planning a €1 billion issue of bonds sometime this year, a market source said.

And Serbia is considering an issue of international bonds, to price in the fourth quarter of this year, a market source said.

No other details were immediately available on Wednesday.

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