EM weakens on Deutsche Bank news; Latvia eyes notes; Banorte, Liverpool, Ultrapar sell notes

By Christine Van Dusen

Atlanta, Sept. 30 – Emerging markets assets struggled on Friday, with the new notes from South Africa suffering, on negative news about Deutsche Bank.

“We’re off to a weaker start into the day as concerns on Deutsche Bank are mounting after a dozen hedge funds announced that they have moved some of their exposure out of the German lender,” a London-based analyst said. “Its stock has tumbled by 17% since mid-September, when it emerged that the bank might have to pay as much as $14 billion to settle an investigation on the sale of residential mortgage-backed securities.”

On this weaker sentiment, U.S. Treasuries retreated and oil prices gave up some of their gains, he said.

“EM currencies and credit are also starting on the weaker foot,” he said.

Indeed, the new issue of notes from South Africa was “feeling the pinch,” he said.

The sovereign on Thursday priced a $3 billion issue of notes due Oct. 12, 2028 and 2046, according to an informed source.

The deal included $2 billion 4.3% notes due 2028 that priced at par to yield 4.3%, following talk in the 4 5/8% area. On Friday the notes were spotted at 98 bid, 98¾ offered.

The $1 billion 5% notes due in 12 years priced at par to yield 5%, following talk in the 5 3/8% area. On Friday the notes were trading at 99 3/8 bid, 100 1/8 offered.

Barclays Bank, HSBC, JPMorgan and Nedbank were the bookrunners for the deal, concurrent with a tender offer.

The proceeds will be used for general purposes of the government, including financial investment and the refinancing, repurchase or retiring of domestic and external debt. A portion of the proceeds will also be used for liability management transactions, including the payment of the purchase price for the old notes.

Latvia to issue in euros

In deal-related news, Latvia is planning to issue euro-denominated notes due in 10 years, according to an announcement from the sovereign.

JPMorgan, Barclays Bank and Goldman Sachs are the bookrunners for the Regulation S deal.

Ultrapar sells notes

On Thursday, Brazil-based Ultrapar Participacoes SA sold $750 million 5¼% notes due Oct. 6, 2026 at 98.097 to yield 5½%, or Treasuries plus 394.2 bps, a market source said.

BB Securities, Bradesco BBI, Morgan Stanley and Santander were the bookrunners for the Rule 144A and Regulation S deal.

The issuer is a petrochemicals company based in Sao Paulo.

Issuance from Liverpool

Mexico’s El Puerto de Liverpool SAB de CV priced $750 million 3 7/8% notes due Oct. 6, 2026 at 98.881 to yield Treasuries plus 245 bps, a market source said.

Citigroup, Credit Suisse and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes, including financing of a portion of proposed acquisitions.

The retail company is based in Mexico City.

Banorte prints bonds

Also on Thursday, Mexico’s Banco Mercantil del Norte SA (Banorte) priced $500 million 5¾% notes due Oct. 4, 2031 at 98.14 to yield Treasuries plus 444.7 bps, a market source said.

BofA Merrill Lynch, JPMorgan and Morgan Stanley were the bookrunners for the Rule 144A and Regulation S deal.

Banorte is a lender based in Monterrey, Mexico.

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