Nemak prices notes; GarantiBank active in trading; strong U.S. data brings relief to EM

By Christine Van Dusen

Atlanta, March 10 – Emerging markets investors on Friday were nervous, then relieved after the United States released jobs data that showed strong hiring, lower unemployment and better wage growth. Against this backdrop, Mexico’s Nemak SAB de CV priced new notes and Turkey-based Turkiye Garanti Bankasi’s (GarantiBank) new notes were active in trading.

“EM investors are jittery ahead of today’s non-farm payrolls and next week’s FOMC meeting,” a London-based analyst said on Friday morning. “Ahead of the February job market report, U.S. 10-years have widened to 2.61% while the U.S. dollar has given up some gains, mainly against the euro, which however also serves as a breather for EM currencies that are opening stable versus the greenback.”

But when the U.S. released its February report – showing the third-longest economic expansion ever recorded – investors breathed a sigh of relief and went back to anticipating a rate hike soon from the Federal Open Market Committee, a trader said.

In trading on Friday, the new notes from Turkey’s GarantiBank – a $500 million issue of 5 7/8% notes due 2023 that priced Thursday at par – opened at about 99.90 bid, par offered.

Later in the session the notes were seen at 99.975 bid, 100.475 offered.

The notes were talked at a yield in the 5 5/8% to 6% area.

BBVA, Citigroup, Goldman Sachs, JPMorgan, MUFG and SMBC Nikko were the bookrunners for the Rule 144A and Regulation S deal.

In its new deal, Mexico-based global automotive parts manufacturing company Nemak priced €500 million seven-year notes at par to yield 3¼%, according to a company announcement.

JPMorgan, BNP Paribas and Morgan Stanley were the bookrunners for the Rule 144A and Regulation S deal.

Odebrecht in focus

Investors were also keeping an eye on the reverberations felt from the controversy at Brazil-based Odebrecht SA. The company remains embroiled in a bribery scandal, and issuance from the region has dwindled as a result, a trader said.

Paraguay is one of the few issuers to advance a deal, mandating BofA Merrill Lynch and Citigroup as bookrunners for an offering of up to $550 million of notes.

The proceeds will be used to refinance debt and for infrastructure projects.

Those kinds of projects are the ones that have suffered the most in the wake of the Odebrecht scandal, the trader said.

Yingde eyed

Some investors were watching China’s Yingde Gases Group Co. after shareholders voted to remove the company’s chairman, which could advance the sale of Yingde to Pennsylvania-based Air Products & Chemicals Inc.

“We expect that Yingde Gases bond prices should stabilize at the moment,” according to a report from Schildershoven Finance BV. “We do not rule out that the major shareholders may abandon the plans to sell the company.”

Liquidity remains a concern, the report said.

“At this stage, the company still does not have a concrete plan to refinance or repay its upcoming RMB 880 million onshore medium-term notes due in July 2017,” the report said. “And, if the sale of the company proceeds as proposed, a change-of-control triggering event may accelerate early repayment of Yingde's total amount of $675 million outstanding bonds, which were originally due in 2018 and 2020.”

Lenovo taps market

On Thursday, China’s Lenovo Group Ltd. priced a $500 million issue of 3 7/8% notes due March 16, 2022 at 99.806, according to a company filing.

The company, through subsidiary Lenovo Perpetual Securities Ltd., also priced $850 million of perpetual cumulative preferred shares. The preferreds priced with a 5 5/8% dividend.

ANZ, BOC, Barclays Bank, BNP Paribas, CCB Asia, Citigroup, Credit Agricole CIB, DBS Bank, BofA Merrill Lynch, Mizuho Securities, Morgan Stanley, MUFG, Societe Generale and Standard Chartered Bank were the bookrunners for the Regulation S deal. BNP Paribas, Citigroup, DBS Bank, and Morgan Stanley were also the joint global coordinators.

The proceeds will be used to repay amounts outstanding under a promissory note to Google Inc., in relation to the acquisition of Motorola Mobility Holdings LLLC, and for working capital and general corporate purposes.

© 2015 Prospect News.
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