Noble Group, Banco Bonsucesso price; market watches Argentina; Cosan, MB Petroleum on tap

By Christine Van Dusen

Atlanta, Oct. 27 - Issuers brought a smattering of new deals on Wednesday - including notes from Hong Kong's Noble Group and Brazil's Banco Bonsucesso SA - as emerging market assets saw some weakness on concerns that the Federal Reserve might not be aggressive with quantitative easing.

Only Argentina was a standout on the news that former president Nestor Kirchner had died, a headline that led market-watchers to believe the sovereign might soon adopt market-friendlier economic policies.

Though yields in Brazil, Hungary and Turkey were wider by as much as 15 basis points, Argentina's ended the day tighter by 60 bps, helping the JPMorgan Emerging Markets Bond Index Plus close 9 bps tighter.

The Argentina news is "bullish," given that it could fracture president Cristina Fernandez Kirchner's power base and decrease the chance that she will run for re-election, a move that would make room for presidential candidates who are more focused on "orthodox economic policies," RBC Capital Markets debt strategist Eduardo Suarez wrote in a research note.

Otherwise, Wednesday was largely "quiet," a market source said.

QE concerns remain

"The market is hovering and very subject to the variation and volatility in the dollar, and that's obviously a reflection of the uncertain terrain regarding quantitative easing," said Enrique Alvarez, debt strategist with think tank IDEAglobal.

Investors barely seemed to notice the Commerce Department's report that September orders for durable goods in the United States saw a better-than-expected 3.3% boost, the biggest jump since the beginning of the year.

Though the numbers were impressive, some sources deemed them disappointing because aircraft orders accounted for the majority of the increase. Without that factored in, durable-goods orders decreased by 0.8% in the month.

Argentine assets rally

Most of the focus during the day was on Argentina and the market-related impact of Nestor Kirchner's death.

This "opens up the possibility that someone will take Argentina away from the current policies that inflict so much damage on Argentina's image in the market," Alvarez said.

In response to the news, "Argentine assets saw a sharp rally," according to another RBC report.

The Argentina 2033 discount bond was at 92 bid, up about $3 on the day.

"That's very significant," Alvarez said. "I think it's a natural, knee-jerk reaction. It's a feeling of hope, more than anything else, on the political spectrum."

In the short term, this isn't likely to inspire Argentina to tap debt markets, given that the sovereign has "a number of artificial ways to fund themselves using some sort of government-held pension money and the like," he said. "They have professed that they have no intention of coming to market at these levels, though they've been studying to see if spreads compress more, and at that point they would be obligated to come to market."

In the medium term, "it might open a window toward a more open and transparent negotiation with multilaterals that are owed money, like the Paris Club," he said. "I don't know how fiercely Cristina will hold on to Nestor's ideology. But it does open a number of portals and possibilities. That's a positive aspect."

Still, it's worthwhile to be cautious, Suarez said, because "the shifting political power balance is likely to drive elevated levels of political noise and volatility."

Asia remains in focus

Meanwhile, the primary market moved at a fairly slow clip.

Hong Kong-based shipping company Noble Group priced $350 million perpetual notes at par to yield 8½%, a market source said.

JPMorgan, RBS and Standard Chartered were the bookrunners for the Regulation S transaction, which was talked to yield in the 8½% area.

The notes are non-callable for five years, and proceeds will be used for general corporate purposes.

Also from Hong Kong, business conglomerate Sinochem Overseas Capital Co. Ltd. - a subsidiary of Sinochem Hong Kong Group Co. Ltd. - mandated Citigroup, HSBC and UBS as bookrunners for a benchmark-sized issue of 10- and 30-year dollar-denominated notes, a market source said.

A roadshow for the Rule 144A and Regulation S deal began Tuesday and will travel through Asia, Europe and the United States.

"There are too many new issues coming to keep track of," a London-based trader said.

Bonsucesso prices notes

From Latin America, Brazil-based lender Banco Bonsucesso priced $125 million 9¼% tier 2 notes due Nov. 3, 2020 at 98.409 to yield 9½%, or Treasuries plus 682.1 bps, a market source said.

Santander and Espirito Santo Investment Bank were the bookrunners for the Rule 144A and Regulation S transaction.

Proceeds will be used for general corporate purposes and to increase the company's lending operations while maintaining a minimum reference stockholders' equity ratio of 15%.

Also from the region, Santiago, Chile-based telecommunications company Telefonica Moviles Chile SA mandated BBVA Securities, Citigroup and Deutsche Bank as bookrunners for a five-year dollar-denominated issue of notes that will be marketed on a roadshow starting Friday, a market source said.

The Rule 144A and Regulation S transaction is expected to launch soon after the investor meetings, which will be held in Los Angeles, London, Boston and New York.

Issuers move toward market

Latin America also saw Brazil-based energy producer Cosan Overseas Ltd.'s planned issue of $300 million perpetual bonds whispered at a yield in the 8½% area, a market source said.

Credit Suisse, Morgan Stanley and JPMorgan are the bookrunners for the Regulation S-only deal, which is non-callable for five years.

And the Argentine province of Neuquen upped the size of its planned floating-rate notes to $250 million from $200 million, a market source said.

The notes will have a maximum maturity of 10 years.

Proceeds are expected to be used for the repayment of debt, though some sources now say the funds will be used to finance infrastructure projects.

MB Petroleum plans deal

In another upcoming deal, Oman-based oilfield services company MB Petroleum Service LLC has mandated Barclays Capital, HSBC and Standard Chartered as bookrunners for a $350 million issue of senior notes that will be marketed on a roadshow starting Thursday, a market source said.

The Rule 144A and Regulation S deal is expected to launch following the investor meetings in Asia, the United Arab Emirates, Europe and the United States.

The notes will be guaranteed by parent company Mohamed Al Barwani Holding Co. LLC, MB Petroleum and other subsidiaries.

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