Brazil's BNDES, Sri Lanka tap primary market; Russian bonds weaken; LatAm notes tighten

By Christine Van Dusen

Atlanta, April 7 - Brazil's Banco Nacional de Desenvolvimento Economico e Social (BNDES) and Sri Lanka sold notes on a Monday that saw Latin American bonds tighten even as investor sentiment dipped on word that Russia had not pulled troops from the Ukraine border.

"Russia is weaker this morning, circa 10 basis points wider in credit default swaps, while cash is trading down," a London-based analyst said. "This morning's sell-off may also reflect profit-taking after a strong previous week."

Selling was seen for Russian banks, including VTB Bank's 2022s, Sberbank's 2024s and Gazprombank's 2017s.

"There are still some buyers in the short end," the analyst said.

Meanwhile, Ukraine remained in focus as tensions heated up for the sovereign.

"Events in Eastern Ukraine, where new pro-Russian protests yesterday led to seizures of government buildings, will again occupy investors' minds in the coming days," said Svitlana Rusakova of Dragon Capital.

In other trading on Monday, investors were buying notes from Central and emerging Europe, the analyst said.

"Turkey is a little wider in credit default swaps, circa 3 bps," she said.

From Latin America, bonds tightened as the session wore on, a New York-based trader said, with low-beta credits narrowing as much as 5 bps from Friday.

Venezuela and PDVSA finished the day nearly unchanged, he said, while Argentina underperformed amid solid activity and sellside-driven flows.

In deal-related news, Pakistan and Zambia set talk for upcoming deals, Morocco's Office Cherifien de Phosphate (OCP) planned a marketing trip, Indonesia's PT Sri Rejeki Isman Tbk. (Sritex) set out on a roadshow and Nigeria's Zenith Bank was looking to issue bonds.

BNDES does deal

In its new deal, Brazil-based economic and social development bank BNDES priced a two-part issue of $1.5 billion notes due in 2019 and 2023, a syndicate source said.

The $1 billion 4% five-year notes priced at 99.758 to yield Treasuries plus 237.5 bps.

The notes were talked at a spread of Treasuries plus 240 bps to 250 bps.

The $500 million tap of the company's $1.25 billion 5¾% notes due Sept. 26, 2023 priced at 103.143 to yield Treasuries plus 262.5 bps.

The notes were talked at a spread of 265 bps to 275 bps.

BB Securities, Citigroup, HSBC and Mitsubishi UFJ Securities are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Sri Lanka sells notes

Also on Monday, Sri Lanka priced a $500 million five-year notes at par to yield 5 1/8%, or Treasuries plus 346.7 bps, a market source said.

Citigroup, HSBC and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

Pakistan talks notes

Pakistan set talk for its upcoming issue of dollar-denominated notes due in five and 10 years, a market source said.

The five-year notes were talked at a yield in the mid-7% area.

The 10-year notes were talked at a yield in the mid-8% area.

BofA Merrill Lynch, Barclays, Citigroup and Deutsche Bank are the bookrunners for the Rule 144A and Regulation S deal.

The notes are expected to price on Tuesday.

Zambia gives guidance

Zambia set initial talk at 8¾% to 8 7/8% for its upcoming issue of dollar-denominated and benchmark-sized notes due in 10 years, a market source said.

Barclays and Deutsche Bank are the bookrunners for the Rule 144A and Regulation S deal.

Also from Africa, Nigeria-based Zenith Bank is looking to issue up to $500 million of five-year notes, a market source said.

Roadshows planned

Morocco-based phosphate exporter OCP will set out on Tuesday for a roadshow to market an issue of notes, a market source said.

The proceeds will be used to fund the company's expenditure program and for general corporate purposes.

And Indonesian textile manufacturer Sritex is on a roadshow for a dollar-denominated issue of notes with Barclays for a Rule 144A and Regulation S deal.

The roadshow began on Monday and will be held in Asia, London and the United States.

Mexican corporate prints

On Friday, Kimberly-Clark de Mexico SAB de CV sold $250 million 10-year notes at par to yield 3.8%, a market source said.

BofA Merrill Lynch and Citigroup were the bookrunners for the deal.

KCM is 48%-owned by Kimberly-Clark Holland Holdings BV, a subsidiary of consumer products company Kimberly Clark Corp.

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