Primary hosts Pemex, Koc, Buenos Aires, Cemex, ADB, Israel; Lat-Am tighter; CBQ eyes deal

By Christine Van Dusen

Atlanta, March 9 – Mexico’s Petroleos Mexicanos SAB de CV (Pemex), Turkey’s Koc Holding AS, Buenos Aires, Philippines’ Asian Development Bank, Mexico’s Cemex SAB de CV and Israel sold notes on Wednesday as emerging markets investors continued to embrace risk and some spreads tightened.

Still, “client buying was not as fervent as last week and early this week,” a New York-based trader said. “Performance is mostly scattered between unchanged and slightly higher, as we have recouped yesterday’s move lower in some credits that did so.”

This was particularly true for Latin America, though Brazil-based Braskem SA’s “recent glamour” is on the wane, he said.

“I think some would-be Braskem money has moved into [Gerdau SA],” he said. “The market and clients are definitely gaining a stronger comfort level with the credit at current yields.”

Into the close, most names from the region moved tighter and higher, another trader said.

Brazil’s five-year credit default swaps spreads closed at 402 basis points from 408 bps, while Mexico’s moved to 402 bps from 408 bps.

“Cash prices were relentlessly bid throughout the day, with some bonds hitting fresh recent highs,” he said. “It seems there is not enough paper out there to fill the needs of cash coming back into our market.”

High yield names from Latin America were mixed on the day, with Venezuela bouncing after an economic policy announcement and Argentina staying mostly unchanged.

Venezuela’s 2027s moved to 41.75 from 39.50, PDVSA’s 2017s closed in the 54 area from 51.50, and Argentina’s Bonar 2024s were unchanged at 108.

“Markets are all geared up for [the European Central Bank] tomorrow, which is sure to trigger plenty of volatility,” he said. “EM credit continues to trend higher and tighter, and unless we get an unexpectedly hawkish ECB that does not deliver additional QE, this bid in risk assets should continue as yield-starved fixed income investors scour the globe for any pickup.”

Pemex prints bonds

In its new deal, Mexico-based petroleum company Pemex priced a two-tranche issue of €2.25 billion notes due March 15, 2019 and 2023, a market source said.

The €1.35 billion 3¾% notes due in priced at 99.838 to yield 3.308%, or mid-swaps plus 395 bps.

The €900 million 5 1/8% notes due 2023 priced at 99.495 to yield 5.213%, or mid-swaps plus 495 bps.

Credit Agricole CIB, Deutsche Bank, HSBC and Societe Generale CIB were the bookrunners for the Regulation S deal.

The proceeds will be used to finance the company’s investment program, for working capital needs and for refinancing indebtedness.

Cemex sells notes

Mexico-based cement producer Cemex priced an upsized $1 billion of 7¾% notes due March 16, 2026 at 99.986 to yield 7¾%, a market source said.

The notes were talked at a yield in the 8 3/8% area.

BBVA, BofA Merrill Lynch and Citigroup were the active bookrunners for the Rule 144A and Regulation S deal. HSBC, ING and Santander were the passive bookrunners.

The proceeds will be used to fund the redemption or repurchase of the company’s 9 7/8% notes due 2019, the 9 7/8% euro notes due in 2019 and the 9½% notes due 2018. Other proceeds will be used for general corporate purposes, according to a company filing.

Israel prices bonds

Israel priced $1.5 billion of notes in a two-tranche deal that included $1 billion of new bonds and a $500 million tap of existing notes, a market source said.

The $1 billion 2 7/8% notes due March 16, 2026 priced at 99.423 to yield Treasuries plus 110 bps, following talk in the 105-bps area.

The $500 million tap of the sovereign’s 4½% notes due Jan. 30, 2043 priced at 105.116 to yield Treasuries plus 150 bps, following talk in the 155-bps area.

Barclays, Citigroup and Goldman Sachs were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general budgetary purposes.

Issuance from ADB

Asian Development Bank priced $3 billion 1 5/8% notes due March 16, 2021 at 99.923 to yield Treasuries plus 31.35 bps, according to a company announcement.

Citigroup, JPMorgan, Nomura and RBC Capital Markets were the lead managers. BofA Merrill Lynch, Bank of Montreal, BNP Paribas, Daiwa Securities, DBS Bank, Deutsche Bank, Goldman Sachs, HSBC, Mizuho International, Morgan Stanley formed the syndicate group.

The issue saw 46% of the bonds placed in Asia; 29% in Europe, Middle East and Africa; and 25% in the Americas. About 58% of the bonds went to central banks and official institutions, 29% to banks and 13% to fund managers and other types of investors.

Manila-based ADB plans to raise around $20 billion from the capital markets in 2016.

Koc Holding does deal

In its new deal, Turkey’s Koc Holding priced $750 million 5¼% notes due March 15, 2023 at 99.135 to yield 5.4%, a syndicate source said.

The notes were talked at a yield of 5½% to 5 5/8%.

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

“According to the bond prospectus, Koc intends to use the proceeds for ‘general corporate purposes.’ In the investor presentation, the company reiterated that there was no specific or planned purpose, but to ‘enhance liquidity and diversify the funding base,’” a trader said. “While we do not rule out that the proceeds will be used for an acquisition, the uncertainty is mitigated by the holding’s sound financial policies, with limits on leverage for each major company and at group level.”

The issuer is an Istanbul-based industrial conglomerate.

“I guess what is clear is investors are demanding deals to come with real value, even in risk-on environments,” a trader said, prior to the pricing. “I know there are some big supporters of the credit and the pricing, albeit not screaming cheap, should offer a small cushion of early performance.”

Buenos Aires prints notes

Buenos Aires priced $1.25 billion in 9 1/8% amortizing notes due March 16, 2024 at 98.741 to yield 9 3/8%, a syndicate source said.

The notes were talked at a yield in the mid-to-high-9% area.

The notes will have an average life of seven years and have three equal amortizations in 2022, 2023 and 2024.

Citigroup, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for funding social, infrastructure and other public investment projects, as well as for debt refinancing.

CBQ seeks issuance

In other news, Commercial Bank of Qatar QSC will seek approval from shareholders next week for up to $3.5 billion of bonds, a market source said.

The notes will carry a maximum maturity of 30 years.

Other details were not immediately available on Wednesday.

The bank provides retail and wholesale banking services and is based in Doha, Qatar.

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