Emerging markets quiet in secondary, heavy on banks in the primary; Credito Real prices

By Christine Van Dusen

Atlanta, April 9 - On a fairly quiet Friday in emerging markets, investors and issuers wrapped up their post-Easter holidays and prepared for the week ahead to be a particularly busy one for new issuance, market sources said.

"In general, things are hanging in there today," a New York-based market source said. "Nothing is shooting up; nothing is falling down."

Among the sovereigns, "most are pretty flat to yesterday," he said. "Mexico's swap results are flat, Peru is down slightly. Nothing alarming."

And most of the recent new issues "continue to perform very well," he said, pointing to Credito Real SA de CV Sofom's recent pricing of $150 million notes due 2015 at par to yield 10¼%.

Like Credito Real, many of the latest new issues have been in the financial sector.

The recent issues include Brazil-based Itau Unibanco's $1 billion 6.2% notes due 2020 that priced at 99.552 to yield 6.261%, or 237.5 basis points over Treasuries; Banco ABC Brasil SA's $300 million 7 7/8% tier 2 notes due 2020 that priced to yield 8 1/8%; and Banco Santander Brasil's $500 million 4½% notes due 2015 that priced at 99.77 to yield Treasuries plus 200 bps.

And on Friday two new issuers from the banking world announced they would soon bring deals to market.

There's Brazil's Banco Industrial e Comercial SA, also known as BicBanco, which has mandated HSBC, JPMorgan and Standard Chartered as bookrunners for a planned dollar-denominated offering of 10-year tier 2 notes.

And Banco Internacional del Peru SAA is planning to issue $150 million step-up junior subordinated notes due 2070 via Bank of America Merrill Lynch and JPMorgan.

"That's the one concern: That there's been a lot of financial institution supply," a market source said. "That's a lot of exposure to the same sector."

The amount of financial sector issuance, plus other deals in the pipeline, might make for "too much supply," he said. "That could break down the market a little bit. But as of now there's no reason for the fun to stop in the near term."

Primary gains momentum

The real primary action is expected to heat up next week, he said, when a number of deals are expected to price.

Possibly on tap are Russia-based Nomos-Bank's planned issue of notes via UBS, VTB Capital and Nomos-Bank; MOL Hungarian Oil and Gas' euro-denominated, benchmark-sized issue of notes via BNP Paribas, Deutsche Bank, RBS and Unicredit; and Dubai Electricity and Water Authority's planned dollar-denominated issue of notes or sukuk offering.

"There could also be one or two drive-bys, and a few more announced on Monday. So next week has the potential to be extremely busy," the source said.

The following week, however, is expected to be quiet - at least on the corporate side. "Most of the corporate issuers will be in quarterly earnings blackout," he said. "But if that slows down you might see a sovereign come in and try to scoop up a bid while things are quieter."

Credito Real prices notes

Mexico's Credito Real priced $150 million 10¼% notes due April 14, 2015 (expected /BB-/) at par, according to an informed market source.

Bank of America Merrill Lynch was the bookrunner for the Rule 144A and Regulation S offering, which was priced in line with price talk.

The notes include a change-of-control put at 101%.

Proceeds will be used for general corporate purposes, debt prepayment and loan portfolio growth.

Credito Real is a consumer financing company based in Del. Miguel Hidalgo, Mexico.

BicBanco taps bookrunners

Brazil's Banco Industrial e Comercial, also known as BicBanco, has mandated HSBC, JPMorgan and Standard Chartered as joint bookrunners for a planned dollar-denominated offering of 10-year tier 2 notes (expected Ba2), according to a market source.

The Rule 144A and Regulation S deal will be launched subject to market conditions following a roadshow in Asia, Europe and the United States.

BicBanco is Sao Paulo-based lender.

Banco Internacional del Peru plans notes

Banco Internacional del Peru is planning to issue $150 million step-up junior subordinated notes due 2070 (expected Ba3//BB), according to an informed market source.

Bank of America Merrill Lynch and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

The notes are non-callable for 10 years. There is a fixed-rate coupon for the first 10 years. If not called, after 10 years the coupon steps up to 200 bps over the initial 10-year mid-swap spread, with a minimum coupon of the initial fixed coupon plus 200 bps.

Banco Internacional del Peru is a financial institution based in Lima.

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