Primary sees deals from Vale, China State Construction; Latin American bonds trade mixed

By Christine Van Dusen

Atlanta, June 7 – Brazil’s Vale Overseas Ltd. and China State Construction Engineering Corp. sold notes on a “buoyant” Tuesday for many emerging markets assets, though some Latin American names put in mixed performance.

“The setting for EM remains buoyant, supported by low United States rates and stable oil prices around $50 a barrel,” a London-based strategist said. “Fed chair Yellen’s comments from yesterday appear to support investors’ view that a rate hike in June is highly unlikely.”

Latin American bonds opened strongly before weakening into the close, a New York-based trader said.

Brazil's five-year credit default swaps spreads closed at 328 basis points, unchanged, while Mexico's tightened to 156 bps from 158 bps.

Venezuela’s 2027s were flat at 45 and PDVSA's 2017s finished at 69.75 from 70 after trading as high as 70.75.

In its new deal, Brazil’s Vale Overseas sold $1.25 billion five-year notes at par to yield 5 7/8%, an informed source said.

And, China State Construction Engineering priced a two-tranche issue of $1 billion notes due June 14, 2019 and 2021, a market source said.

The deal included $500 million 2¼% notes due 2019 that priced at 99.738 to yield 2.341%, or Treasuries plus 142.5 bps. The $500 million 2.7% notes due 2021 priced at 99.763 to yield 2.751%, or Treasuries plus 152.5 bps.

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