Norilsk, Borets launch deals; Argentina ‘tried’ to rally on upgrade; Asian market softer

By Colin Hanner

Chicago, April 4 – Two deals launched out of Russian-focused areas on Tuesday, market sources said, and a general quietness was felt in Latin American and Asian markets.

Asian markets were softer with the Ching Ming Festival taking place, a market source said, while Latin American markets were generally softer, another market source said.

Norilsk sells $1 billion notes

OJSC MMC Norilsk Nickel priced its $1 billion of 4.1% loan participation notes at par on Tuesday, a market source said.

Earlier in the session, it had launched after coming inside final yield talk in the 4¼% area after initial talk around 4½%.

One market source said the securities had been discussed in a 4% to 4 1/8% range.

The notes are rated Ba1 by Moody’s Investors Service and BBB- by S&P Global Ratings.

Societe Generale CIB will act as a stabilizing manager, a market source said. The syndicate also includes Barclays and JPMorgan.

The securities will be issued via MMC Finance DAC.

MMC Norilsk Nickel is a Moscow-based mining and metallurgical company.

Borets launches upsized deal

Borets International Ltd. launched an upsized $330 million offering of non-callable five-year notes at 6½% on Tuesday, according to a market source.

The launch comes inside of final yield talk in the 6¾% area. Initial price talk was 6¾% to 7%.

The deal, which was upsized from $300 million, was expected to price on Tuesday.

HSBC is the lead. The syndicate also includes Goldman Sachs and Sberbank.

Borets, which has global headquarters in Dubai, manufactures and services electric submersible pump systems for the energy industry.

Argentina, LatAm overall quiet

A market source said there was “not a whole lot” going on in Latin American markets on Tuesday, adding that people have been put off by volatility in the United States.

“It’s been quiet, but it has been constructive,” the source said.

The upcoming Easter holiday next week will extend the quietness seen in the markets this week, the source said.

In sovereign territory, Argentina was “finally breaking tighter in style,” a market source said. Earlier in the session, a market source said that after an “Argentina upgrade” – S&P raised the long-term credit rating for the country to B from B- – “prices tried to rally, but it was short-lived.”

Its 5 5/8% notes due 2022 were quoted with a 102.70 bid, 103.20 offer.

The 6 7/8% notes due 2027 were quoted at 102 bid, 102½ offered.

And the 6 5/8% notes due 2028 were quoted with a 98½ bid, 99¼ offer.

South Africa reels

In the geopolitical sphere, South Africa continued to feel the lash of the firing of its finance minister from last week.

“In South Africa, all rating agencies [Fitch, Moody’s and S&P] have now commented following the cabinet reshuffle and removal of Finance Minister Gordhan as the most prominent previous cabinet member,” a market source said.

Inching closer to below investment-grade territory, the market source said further actions by new South African Finance Minister, Malusi Gigaba, as well as any continued political infighting could prove harmful for investors in the country’s sovereign bonds.

“Any indication that those factors might put pressure on South Africa’s rating will likely see sovereign cash underperforming CDS.”

On Tuesday, Moody’s placed the Baa2 rating on three South African banks, citing the potential weakening of the South African government’s credit profile, in particular in the country’s institutional, economic and fiscal strengths, as captured by the agency’s recent decision to place South Africa’s Baa2 government bond ratings on review for downgrade.

Sovereign ticker

Generally, sovereign bonds were down on Tuesday.

Columbia’s 7 3/8% notes due 2019 were quoted with a 110.15 bid, 110.40 offer, less than an 1/8 point lower.

Its 4 3/8% notes due 2021 were quoted with a 106 bid, 106½ offer, more than 1/8 point higher, and the 2 5/8% notes due 2023 were quoted with a 96.35 bid, 96.85 offer, nearly an 1/8 point higher.

Two of Mexico’s sets of notes were unchanged – the 5.95% notes due 2019, which were at 107.70 bid, 108 offered, and its 5 1/8% notes due 2019, which were quoted at 108.15 bid, 108.55 offered – but its 3½% notes due 2021 were quoted at 103.65 bid, 103.15 offered, less than an 1/8 point higher on the session.

Saudi Arabia’s 2 3/8% notes due 2021 were quoted with a 98.37 bid, 98.57 offer, and its 3¼% notes due 2026 were quoted with a 97.55 bid, 97.65 offer.

State oil

Petroleos Mexicanos (Pemex) was “opening a little wider, [though] we have seen buyers,” a market source said.

Its 6% notes due 2020 were quoted at 107.35 offered, 108 bid.

And its 3½% notes due 2020 were quoted at 100.80 offered, 101.30 bid.

Petroleos de Venezuela SA (PDVSA)bonds were lower on the day, a market source said.

Its 5¼% notes due 2018 were quoted with 94 offer, 95 bid, a 1½-point loss since Monday.

The 8½% notes due 2017 were quoted with an 83 offer, 84 bid, 1 point lower. The 8½% notes due 2020 followed with a similar loss to a 73 bid, 74 offer.

And its 9% notes due 2021 were quoted with a 47½ bid, 48¾ offer, a 1¼ to 1½ point loss.

Paul A. Harris contributed to this review.

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