Emirates NBD brings 3.5-year deal; Brazil 30-year paper eases on quiet summer Friday

By Paul A. Harris

Portland, Ore., July 22 – A quiet summer Friday saw buyers step in during the New York afternoon, trailing better sellers during the morning session, a source said.

Sentiment on politically embattled Turkey, which improved throughout the day, boosted the index by 25 cents to 93.30 from 93.05.

Brazil five-year credit default swaps tightened by 4 basis points to close at 286 bps bid.

Mexico five-year CDS ended at 139 bps bid, 2 bps tighter.

Latin America high yield ended the session unchanged.

Venezuela’s state-owned Petroleos de Venezuela, SA (PDVSA) notes due in 2017 finished at 76 bid, down from 76¼ bid.

Venezuela sovereign bonds due 2027 closed at 50 bid, down from 50¼ bid.

Turkey weighs overnight

It was a different story on Turkey during the London afternoon, according to a trader based there.

News that the Turkish government declared a state of emergency sent buyers scampering once again.

Prior to the announcement there had been some two-way trading in Turkish debt – with some bargain shoppers making an appearance.

“The Turkish sovereign is 100 bps wider on the week,” a trader said early Friday.

As of Thursday the front end of Turkey’s sovereign curve was 150 bps wider, while the long end was 175 bps wider, the source said.

Turkish credit default swaps were 271 bps bid on Friday, versus 281 bid at Thursday’s close.

“Prior to the declaration of a state of emergency we started to see the first signs of real money coming in,” the trader said, but added that as of Friday afternoon in London Turkish credit was continuing to widen in one-way trading.

Brazil 30-year long paper

Brazil’s new 5 5/8% global bonds due February 2047 (Ba2/BB/BB) eased overnight.

The bonds, which priced at 96.464 to yield 5 7/8% on Thursday, were trading at 96 bid, 96¼ offered at the New York open.

The long 30-year paper came in a $1.5 billion issue that played to nearly $6 billion of orders, a source said.

Brazil locked in long term capital at a pretty good price, said a trader adding that the new 30-year debt yields 10.5 bps higher than Brazil’s sovereign due in 2035, which was trading with a yield of 5.77% on Friday.

Emirates NBD 3.5-year deal

Dubai’s Emirates NBD (A3//A+) priced a $500 million issue of 3.5-year senior floating-rate notes at par to yield Libor plus 155 bps on Friday, according to a market source.

Standard Chartered Bank was the sole bookrunner.

Emirates NBD is a provider of corporate, consumer, treasury and investment banking and asset management services.

Trinidad & Tobago

Looking to the week ahead, the Republic of Trinidad and Tobago (Baa3/A-) mandated Deutsche Bank and First Citizens Bank to set up meetings with fixed-income investors ahead of a possible dollar-denominated offering of 10-year bonds, according to a market source.

The international roadshow for the contemplated Rule 144A and Regulation S offer starts on Monday.

Odebrecht softer

Among distressed names, Odebrecht Finance Ltd. was continuing to soften amid concerns about the company and its association with a corruption scandal in Brazil. The parent company, Odebrecht SA, was also looking to fight back against rumors it was seeking some sort of reorganization.

Odebrecht Finance’s 7 1/8% notes due 2042 remained under pressure on Friday, as rumors continued to swirl about the overall financial strength of the parent organization.

A trader said the notes dipped almost a point to 33¾. That was in addition to the 2 points lost on Thursday.

At another desk, a trader said the bonds were “down a little bit,” placing them in a 33½ to 34 context.

On Thursday, financial blog Brasil Journal wrote that Odebrecht – which has been struggling under its debt burden due to allegations of corruption in Brazil – was looking to reorganize. The company issued a statement refuting the claims.

“With regard to the rumor published in the blog Brasil Journal, Odebrecht informs that the speculations regarding an alleged court-supervised reorganization are completely false,” the company said in its statement. “The group is not considering such an alternative. Its dialogues with banks continue to be very positive, with proof of this including the recent financial restructuring at Odebrecht Agroindustrial, which involved the injection of new funds, and the transaction to raise capital at Odebrecht Transport. The asset divestment program is already bearing fruit, with some transactions already completed and others in the final phase of negotiation.”

In April, it was reported that Odebrecht’s attempts to refinance as much as 35 billion reais in loans was not going well, as banks were weary of the corruption scandal. In the last week, it was reported that a sale for the company’s 55% stake in a natural gas pipeline in Peru was not going well, as banks were refusing to finance the project if Odebrecht stayed involved.

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