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Morning Commentary: Emerging markets subdued amid rates focus; Growthpoint prices $425 million deal
By Rebecca Melvin
New York, April 25 – Emerging markets debt was “subdued” on Wednesday with little new issue news and low activity in the secondary as market players fixated on the move in rates, according to sources.
The benchmark 10-year U.S. Treasury note yield ticked above 3% for the first time in four years on Tuesday.
The move in core rates in the last two days combined with closing in on month end have meant flows have been particularly light, a London-based market source said.
“People are a lot more subdued than I would have expected. The feeling is there is no rush to add risk just yet, and the thinking is that even if rates rally back below 3%, we will be back up to 3%” in the near term, the source said.
But Growthpoint Properties International (Pty) Ltd., a real estate investment trust based in South Africa, announced it priced $425 million of five-year senior notes (expected rating: Baa3) to yield 5.872%, which was tight to initial price talk in the area of 6%.
Proceeds of the deal, which represents a redo from late last year when the REIT postponed a planned euro-denominated offering, will be used to further the group’s investment in Europe, including its initial investment into Griffin Premium Re. NV, to refinance euro debt and for general corporate purposes.
In addition, China’s Huawei Investment & Holding Co., Ltd. launched €500 million of five-year notes to yield mid-swaps plus 135 basis points, according to a syndicate source.
Pricing came tight to guidance of mid-swaps plus 145 bps, plus or minus 5 bps, and compared to initial price talk of mid-swaps plus 150 bps to 160 bps.
Shenzhen, China-based Huawei is an information and communications technology company.
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