Edenor prints bonds as risk appetite grows, spreads tighten; volumes thin in holiday week

By Christine Van Dusen

Atlanta, April 20 - Argentina's Empresa Distribuidora y Comercializadora Norte SA (Edenor) sold notes on a Wednesday that saw a boost in risk appetite with tighter spreads and solid secondary-market performance for recent new issues. But with the Easter holiday fast approaching, volumes were light.

"The market seems to be very resilient and bouncing after some earlier weakness," a Connecticut-based trader said. "But volumes have definitely been down because of the holiday coming up."

Said a London-based market source: "The prospect of a protracted period of closed or illiquid markets has many people heading for the exits and ensuring EM trades heavy, even as global markets firm."

For those investors not already out the door, sentiment was boosted by positive news from the United States as well as better commodity prices.

"Positive U.S. housing data and quarterly results from U.S. corporates have brought the risk appetite back with a strong bid, heading into the long Easter weekend," a trader said.

The JPMorgan Emerging Markets Bond Index Plus started the day 4 basis points tighter at Treasuries plus 266 bps.

"Reflecting the better investor sentiment, external debt markets have rallied," RBC said.

Edenor sells notes

In its new deal, Argentina's Edenor priced a $69.7 million issue of 9¾% senior notes due Oct. 25, 2022 at 101.25 to yield 9.57%, a market source said.

JPMorgan and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S notes.

The original issue totaled $140 million and priced at par on Oct. 15, 2010.

"Volume is light in Edenor, but it's trading up," a Connecticut-based trader said.

This followed the late-Tuesday pricing of Brazil-based retail and shopping center company General Shopping Finance's $50 million tap of its existing $200 million 10% perpetual notes at 101 to yield 9.482% on Tuesday, a market source said.

Merrill Lynch and BTG Pactual were the bookrunners for the Rule 144A and Regulation S notes.

The original issue priced Nov. 4 at par to yield 10%. Proceeds will be used to finance capital expenditures.

Alfa Bank gets attention

But most market-watchers were more interested in the late-Tuesday pricing of Russia-based Alfa Bank's $1 billion notes due April 28, 2021, which came to the market at par to yield 7¾%, a market source said.

The notes via Goldman Sachs, UBS and Alfa Bank were seen at 100.30 bid, 100.60 offered on Wednesday.

"The new Alfa is taking the spoils despite tightening to 7¾%, inside where they issued a seven-year six months ago," a market source said.

Said a trader: "Alfa is creeping up slowly again. It traded as high as 100 15/16 early on, back down to 100 3/8 and is now trading at roughly 100 5/8. We are left better sellers of it."

Meanwhile the recent issue of 6¾% notes due 2018 from Russia-based steel and mining concern Evraz Group SA - which priced Tuesday at par to yield 6¾% via Goldman Sachs, ING and VTB Capital - were seen at 100.05 bid, 100.35 offered early in the day. Later in the session, the notes were trading at 100.10 bid, 100.30 offered.

"Evraz is much heavier with far less retail interest for all the flippers to sell to," a market source said. "The endless flipping of Evraz and Alfa Bank is taking its toll."

Turkey firms

In other trading, Turkey opened firmer on Wednesday and a trader reported better buying of Yasar Holding AS and better selling of Turkey's Turkiye Garanti Bankasi AS' 2021 and Yuksel Insaat AS' 2015s.

"The longer end of the sovereign curve is trading well and outperforming the credit default swaps move; spreads are 10 bps tighter now," the trader said. "Banks are also firmer, with Akbank's 2018s and GarantiBank's 2021s seeing good demand. But Yapi Kredi's 2015s are trailing at the moment."

He also noted little interest in Kazakhstan's BTA Bank, which traded as low as 105.5 on Tuesday before bouncing.

Another market source saw some selling of Nigeria's 2021 notes. And the recent notes from Abu Dhabi's Mubadala Development Co. PJSC were "moving along nicely, with the 2016 dollar notes now 10 bps firmer from new issue," he said.

Hypermarcas active

Another recent issue that was performing well on Wednesday was the $750 million 6½% 10-year notes from Brazil-based health and personal care products manufacturer Hypermarcas SA.

The notes priced at 98.203 on April 15 via Bradesco BBI, Citigroup, HSBC, Itau and JPMorgan in a Rule 144A and Regulation S transaction.

"That's been active," the Connecticut-based trader said. "It's about 20 bps tighter than when the deal came. There seems to be strong demand in the Street. Corporate Brazilian deals continue to do very, very well with a cross-section of demand."

Also from Latin America, Argentina's Neuquen Province saw demand on Wednesday for its $260 million issue of 7.975% notes due 2021 that recently came to market at 99.423 to yield 8%.

Barclays Capital and Citigroup were the bookrunners for the Rule 144A and Regulation S notes.

"That has done very well, with real money demand," the Connecticut trader said.

Tata Power prints notes

In other deal-related news, India-based power utility Tata Power recently sold $450 million notes due April 27, 2061 at par to yield 8½%, or Treasuries plus 641 bps, via Deutsche Bank, Goldman Sachs and UBS.

Brazil-based lender Banco Pine SA has postponed its planned issue of five-year dollar notes due to market conditions, a market source said.

BTG Pactual, JPMorgan and Santander were the bookrunners for the Rule 144A and Regulation S deal, which was talked in the 7¼% area.

And South Korea-based lender Hana Bank has postponed its offering of dollar-denominated benchmark-sized 5.5-year notes due to market conditions, a market source said.

The notes had been whispered at the Treasuries plus low 200 bps area, a market source said.

Barclays Capital, Citigroup, Hana Daetoo Securities, HSBC and Standard Chartered were the bookrunners for the notes.

CNPC launches

Wednesday also saw oil and gas supplier China National Petroleum Corp. launch a $1.85 billion offering of notes due 2016, 2021 and 2041 via seven bookrunners, a market source said.

The $700 million five-year notes were launched at a spread of Treasuries plus 123 bps after being talked at the Treasuries plus 120 bps to 125 bps area. The $652 million 10-year notes were launched at Treasuries plus 138 bps, below talk of Treasuries plus 140 bps. And the $500 million 30-year notes - which were talked at Treasuries plus 165 bps - launched at Treasuries plus 163 bps.

Citigroup, Standard Chartered, ICBC, BOCI, Merrill Lynch, Deutsche Bank and HSBC are the bookrunners for the Rule 144A and Regulation S notes.

This could be among the few deals to price on Thursday, ahead of the holiday weekend.

"I think things are going to be quiet, particularly with Latin America out for an extended period of time with the Easter holiday," the Connecticut trader said. "We're already seeing a lot of the locals in Mexico and Argentina start to peel their prices off the screen. I think it's going to be very quiet through Monday or Tuesday."

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