Emerging markets funds see $673 million weekly inflows; China Overseas Land prices add-on

By Paul A. Harris

Portland, Ore., Feb. 17 - Emerging markets spreads tightened during a busier-than-expected European session, according to a trader, who specified that cash bonds and synthetics were both firm.

Volumes were thin in the United States as participants turned their attention to the three-day Presidents Day holiday weekend.

Emerging markets bond funds saw their fourth consecutive week of inflows, taking in $673 million for the week to Wednesday's close, according to EPFR Global.

The primary market generated very little news.

China Overseas Land priced a $250 million add-on to its 4 7/8% senior notes due Feb. 15, 2017 - an issue that was minted a little over a week ago.

Inflows continue

Emerging markets bond funds saw $673 million of inflows for the week to Wednesday, according to Brad Durham, managing director of EPFR Global.

It's the fifth consecutive inflow, following the previous week's record-setting $2.14 billion inflow, and it extends year-to-date inflows into emerging markets funds to $4.47 billion.

China Overseas Land returns

China Overseas Land priced a $250 million add-on to its 4 7/8% senior notes due Feb. 15, 2017 (Baa2/BBB/) at a 415 basis points spread to Treasuries.

Deutsche Bank, HSBC, ICBC International and JPMorgan were the bookrunners.

China Overseas is a Hong Kong-based construction and development company.

The original $500 million issue priced at Treasuries plus 410 bps on Feb. 9.

Core Education pulls deal

Core Education and Consulting Solutions, Inc. postponed its $200 million offering of five-year guaranteed senior notes (/B+/).

Barclays Capital Inc. and Jefferies & Co. were the joint bookrunners.

The company planned to use part of the proceeds to redeem preferred shares. The proceeds were then to be used to repay rupee debt and for general corporate purposes, including funding capital expenditures in India.

The Atlanta-based company is provider of technology-enabled education products, services and solutions to the education sector. Its parent is Core Education & Technologies Ltd. of India.

Because of the Indian aspect to the deal it had garnered the attention of some emerging markets investors, even though the issuing subsidiary is based in Atlanta.

Deals withdrawn

Core Education is the fifth dollar-denominated emerging markets bond deal to be withdrawn.

City of Buenos Aires and Brazil's Gol Linhas Aereas Inteligentes SA pulled deals on Thursday.

Buenos Aires mandated Barclays Capital, BTG Pactual and Citigroup to set up investor meetings ahead of a $415 million offering of bonds.

However, increased market volatility related to the ongoing credit crisis in the euro zone on Thursday prompted the issuer to back away from the primary market for the time being, a sellside source said.

Buenos Aires might revive the deal as early as next week.

Meanwhile Gol Linhas Aereas (B1/BB-/BB-) has withdrawn its $100 million minimum offering of perpetual notes, which had been talked with a yield in the 11½% area on Tuesday.

The deal was being led by JPMorgan.

City of Buenos Aires and Gol join Dominican Republic-based Caucedo Investments Inc.,which also postponed an offering of notes, due to price sensitivity, and Brazilian sugar producer Grupo Farias, which withdrew from the market its $300 million offering of seven-year notes (B3), which had been talked to yield 12¼% to 12½%.

The problem, according to a trader, is unrealistic expectations sparked by a market that appears to be rallying.

Issuers and dealers understand that the buyside is heavy laden with cash and keen to put it to work, the trader explained.

However that does not necessarily mean that you will be able to come into the market and get your deal done at the price you are looking for.

Investors continue to approach this market credit-by-credit and story-by-story.

© 2015 Prospect News.
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