Bradesco's $1 billion 10-year deal plays to $7.2 billion orders; Brazil corporates eyed

By Paul A. Harris

Portland, Ore., Feb. 23 - A London-based trader saw "constructive" activity in emerging market cash bonds on Thursday, although credit default swaps were being hit heading into the London close.

"It was an active morning but a lackluster afternoon," the source remarked.

The Markit SovX CEEMEA index, measuring bond default risk in Central- and Eastern Europe, the Middle East and Africa, ended the session at 283 basis points bid, "a couple of points tighter," the trader said.

During the New York session, Brazil's Banco Bradesco SA drove by with a $1 billion issue of subordinated notes.

Bradesco atop tightened talk

Brazil's Banco Bradesco priced a $1 billion issue of 10-year subordinated notes (Baa1//BBB) at par to yield 5¾% on Thursday.

The yield printed at the tight end of final price talk, which was set in the 5 7/8% area. Initial talk was set in the 6% area.

BB Securities, BNP Paribas, Bank of America Merrill Lynch, Bradesco BBI, JPMorgan and Standard Chartered Bank managed the sale.

The deal played to $7.2 billion of orders and traded higher in the secondary market, according to a syndicate source, who did not have immediate access to levels.

Petrobras, CVRD outperform

Elsewhere in the Brazil sector Petroleo Brasileiro SA (Petrobras) and Companhia Vale do Rio Doce SA (CVRD) were the outperformers on Thursday, a trader said.

Petrobras tightened about 5 bps, with the 2020 and 2021 maturities performing the best.

CVRD's 2019 and 2020 maturities tightened by 10 bps across the board on crossover demand.

Turning to Peru, Southern Copper Corp.'s bonds with 2035 and 2040 maturities underwent some selling during the London day but closed that session unchanged.

The entire Chilean curve widened on the day, with bonds 2 bps to 5 bps wider on low volume, the trader added.

Elsewhere, the City of Buenos Aires' new 9.95% bonds due 2017, which priced at par on Wednesday, were straddling issue price, according to a trader in London.

Away from the Latin American space, the new African Bank 8 1/8% senior notes due 2017, which priced at par on Wednesday, continued to plow higher on Thursday, according to a trader, who saw them at 101 5/8 bid, 101¾ offered.

Accounts don't appear particularly committed to the credit, the trader said.

However, given that African Bank is perceived to be investment grade, they like the yield.

© 2015 Prospect News.
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