Emerging Markets: Ukraine, Dominican Republic price add-ons; Pemex sells $1.25 billion bonds

By Rebecca Melvin

New York, Dec. 18 – Issuance in emerging market debt remained steady this past week heading into year-end even though recent strength in emerging markets bonds ebbed off their peak from about midweek as market activity tapered off into the weekend. Issuance next week is expected to be lower given the Christmas holiday.

Ukraine and the Dominican Republic were the notable sovereign issuers. Ukraine priced a $600 million tap of its 7.253% senior notes due March 15, 2033 (B/B) at 108.914, for a reoffered yield of 6.2%, and the Dominican Republic priced a $1.27 billion add-on of its 4 7/8% bonds due 2032 (BB-) that will be consolidated and form a single series $1.8 billion of 4 7/8% bonds issued Sept. 23.

Emerging markets debt is currently the highest ranked fixed income asset class, according to data tracker EPFR. Investors have now committed fresh money to Emerging Markets Bond Funds for 11 straight weeks and 22 of the past 23. Also during the latest week flows to Local Currency and China Bond Funds, which were significant contributors to the headline numbers for the overall group earlier in the quarter, showed a considerable loss of momentum with China Bond Funds recording their smallest inflow since the first week of October.

This past week the iShares J.P. Morgan U.S. dollar emerging markets bond ETF of government bonds showed a slight dip to $114.82 as of Dec. 17. But its total return year to date remains up 5.12%.

Among corporate issuers, Mexico’s state-run Petroleos Mexicanos SAB de CV (Pemex) sold an upsized issue of $1.5 billion of 6 7/8% notes due 2025 (Ba2/BBB/BB-). The deal priced at 99.688.

The Rule 144A and Regulation S notes are guaranteed by subsidiaries Pemex Exploracion y Produccion, Pemex Transformacion Industrial and Pemex Logistica.

The Latin America region, which has had flat issuance this past year despite higher issuance elsewhere, saw a few others deals price this past week. EnfraGen, LLC subsidiaries EnfraGen Energia Sur, SAU, Prime Energia SpA and EnfraGen Spain, SAU priced $710 million of 5 3/8% senior secured notes due 2030 (Ba3).

The proceeds of the Rule 144A and Regulation S issue, together with a $1.05 billion bank debt package, will be used to refinance debt and fund the acquisition of operational solar projects in Chile and the acquisition of project Phoenix. Any proceeds left will go in reserves.

Enfragen is a subsidiary of Glenfarne Group, LLC, a privately held energy and infrastructure development and management firm based in New York with offices in Panama and Chile.

Corporacion Nacional del Cobre de Chile (Codelco) priced $500 million of 3.173% bonds due 2051 (A3/A/A-) on Dec. 7 at a spread of Treasuries plus 148 basis points.

More than 230 orders for a total of over $4.5 billion of the bonds were received, but that rate was the lowest of any bond issued by Codelco.

The bookrunners on the deal were BofA Securities, Inc., JP Morgan Securities LLC, Mizuho Securities USA LLC and Scotia Capital (USA) Inc.

Proceeds will go toward the company’s tender offer of approximately $1.1 billion for five notes due 2021 to 2027.

Codelco is a Santiago, Chile-based copper mining company.

Paraguay’s Banco Continental SAECA issued $300 million of 2¾% sustainability bonds due 2025 (Ba1//BB+) on Dec. 3, according to an announcement.

Proceeds from the issue will be used to fund the bank’s green and social projects.

These are the first sustainable bonds listed by the company, as well as by any financial institution in South America.

The company intends to list the bonds on the Luxembourg Exchange.

Banco Continental is a bank based in Asuncion, Paraguay.

Emerging markets-focused CTP BV priced an upsized issue of €400 million 5/8% green bonds due Nov. 27, 2023 (Baa3/BBB-) on Nov. 27, according to a company release.

The issue was upsized from an originally planned €350 million after being oversubscribed several times, with a peak order book of more than €1 billion.

The joint bookrunners of the Regulation S notes are Morgan Stanley & Co. International plc and Goldman Sachs International.

The issue is expected to be listed for trading on Euronext Dublin.

Proceeds will be used to finance a portfolio of eligible green assets.

CTP issued its inaugural €650 million of green bonds on Oct. 1. The company committed in 2019 to certify its portfolio of logistics and industrial projects to the Breeam Very Good standard and higher.

The logistics property company is the largest in the Central and Eastern European sector.

Wynn Macau Ltd. priced an upsized $750 million add-on to its 5 5/8% senior notes due Aug. 26, 2028 (B1/BB-) at 103 to yield 5.146% on Tuesday, according to market sources.

The deal was upsized from $650 million.

The issue price came at the rich end of the 102.75 to 103 revised price talk, which had richened from earlier talk in the 102.5 area. Initial guidance was in the 102 area.

Joint bookrunner Deutsche Bank will bill and deliver. Additional bookrunners were Banco Nacional Ultramarino SA, Bank of China Macau Branch, Bank of Communications Macau, BNP Paribas, BOC International, BofA, DBS Bank Ltd., ICBC (Macau), JPMorgan, Scotia, SMBC Nikko and United Overseas Bank.

The Macau-based owner and operator of gaming and entertainment facilities plans to use the proceeds to repay bank debt.

Future Land Development Holdings Ltd. issued $450 million of 4.8% notes due 2024 on Tuesday, according to a notice.

The notes were issued via funding vehicle New Metro Global Ltd.

Haitong International Securities Co. Ltd., CMB International Capital Ltd., CLSA Ltd. and Seazen Resources Securities Ltd. were the lead managers and bookrunners.

New Metro is a debt vehicle based in the British Virgin Islands and a subsidiary of Hong Kong-based real estate developer Future Land Development Holdings.

Ukraine, D.R. price

Ukraine $600 million tap added to $2 billion of its 2033 notes that priced in July.

Pricing of the tap was guided to yield of 6.2% to 6¼% from initial price thoughts for yield in the area of 6.4%. The issue was initially talked at $500 million in size.

Joint bookrunners of the Rule 144A and Regulation S notes were BNP Paribas and Goldman Sachs International.

Order books were in excess of $1.5 billion at the time guidance was released.

The notes are expected to be listed on the Euronext Dublin exchange.

The Dominican Republic has issued a $1.27 billion add-on of its 4 7/8% bonds due 2032 (BB-). The add-on will fund the repurchase of the country’s 7½% amortizing bonds due 2021, its 6.6% bonds due 2024, and its 5 7/8% amortizing bonds due 2024 and 5½% bonds due 2025.

Citigroup Global Markets Inc. and J.P. Morgan Securities were the bookrunners and joint dealer managers for the Regulation S and Rule 144A issue.

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