New South Africa edges up on break; Argentina bonds outperform; market eyes Pemex issues

By Rebecca Melvin

New York, May 16 – South Africa’s newly priced 2030 notes and 2048 notes edged up slightly to over par in the early going on Wednesday after the sovereign priced $1.4 billion of the 12-year notes and $600 million of the 30-year notes tight to initial talk, according to sources.

The South Africa 5 7/8% notes due 2030 were 100½ bid, 100¾ offered after the issue priced at 99.992, or a spread of 280.5 basis points over U.S. Treasuries. The longer-dated 6.3% notes due 2048 were quoted at 100.43 bid, 100.68 offered after the issue priced at 99.991, or a spread over Treasuries of plus 310.1 bps.

In addition, Unigel Luxembourg SA has priced $200 million of 10½% five-year notes in a deal that was revised from initial talk to have a shorter tenor and yield that is wide compared to initial price thoughts.

The Unigel notes, which are non-callable for three years, were initially talked at a 2024 maturity and a 10% area yield.

The deal was eked out after the Brazilian commodity chemical producer scuttled new issue plans in March. At that time, the company planned to price $400 million seven-year, non-call three notes with proceeds earmarked for refinancing existing debt.

The market also got official word that Paraguay’s Banco Regional SA has put on hold its planned offering of new notes and cancelled a concurrent tender offer for its existing 8 1/8% notes due 2019.

The lender had initiated the tender on April 24 and extended it on May 3 for two weeks.

Argentina credit had a respite on Wednesday, tightening some 31 bps to a spread of 450 bps over Treasuries and outperforming the overall market, according to a New York-based market source.

Ecuador and Lebanon were also outperformers, with those credits tightening about 48 bps to a spread of 668 bps over and 21 bps to 567 bps over, respectively. Zambia was an underperformer, however, with that credit widening about 29 bps to 633 bps spread over Treasuries.

Argentina has been pounded in recent weeks amid a slide in the Argentine peso. On Wednesday, Argentina’s central bank allowed the peso to float freely and chose not to intervene and sell reserves to shore up the currency for the first time in a week. The peso ended down 0.8% at 24.29 per dollar, and is down about 15% this month.

Also influencing tone, investors on Tuesday held on to their short-term government securities in the government’s monthly debt auction. Meanwhile, market players await word on whether the sovereign will be able to obtain a high access stand-by arrangement with the International Monetary Fund. A decision regarding such a facility is expected on Friday and has been speculated to be for about $30 billion. Argentina announced last week that it was starting talks with the IMF amid a slide in the peso.

Many investors increased their exposure to Argentine bonds last year amid optimism that new, business friendly policies were in place under the government of President Mauricio Macri. But a combination of internal hiccups and higher global yields has sunk the bonds.

Elsewhere, Petroleos Mexicanos SAB de CV announced and priced on Wednesday €3.15 billion of senior unsecured notes in four tranches (expected ratings: Baa3/BBB+/BBB+). The combined order book stood at more than €4.5 billion at the time pricing guidance for the tranches was released.

The company priced €600 million of 4½-year 2½% fixed-rate notes at 99.814 to yield 2.546%, €650 million of 5¼-year floating-rate notes at par to yield three-month Euribor plus 240 bps, €650 million of 7½-year 3 5/8% fixed-rate notes at 99.738% to yield 3.668% and €1.25 billion of 10¾-year 4¾% fixed-rate notes at 99.434 for a yield of 4.821%.

Yield spreads were close to or tighter than guidance and initial price thoughts.

The proceeds will be used to repurchase notes in a concurrent tender offer with the remainder, if any, to finance Pemex’s investment program.

Pemex is a Mexico City-based oil and gas company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.