Emerging Markets: Romania, Georgia’s Silknet price bonds; CSN brings $500 million deal

By Rebecca Melvin

Concord, N.H., Feb. 4 – Emerging markets debt has been weighed down by the prospects of higher interest rates and Friday’s U.S. January jobs report, which was a surprise to the upside, and supportive of the Federal Reserve’s quickened timetable for increases, according to market sources on Friday.

The Labor Department reported that nonfarm payrolls rose 467,000 in January, which was well beyond a Wall Street estimate for a 150,000 payrolls rise, and revisions boosted November and December payrolls by a good amount.

The unemployment rate edged higher to 4% due to higher labor participation rate of 62.2%, up 0.3%, so it was a rosy report all around. Stocks and bond yields rose.

For the week, Romania was a centerpiece of sovereign market activity. Acting through the Ministry of Finance, Romania priced €2.5 billion of six-year notes and 12-year notes on Monday, according to a pricing term sheet.

The €1.25 billion tranche of 2 1/8% notes due March 7, 2028 priced at 99.924 to yield 2.135%, or a spread over mid-swaps of 185 basis points.

The €1.25 billion tranche of 3¾% notes due Feb. 7, 2034 priced at 99.724 to yield 3.779%, or a spread over mid-swaps of 325 bps.

Citigroup Global Markets Europe AG, Erste Group Bank AG, HSBC Continental Europe, ING, J.P. Morgan AG and Societe Generale were joint lead managers of the Rule 144A and Regulation S offering. A listing on the regulated market of the Luxembourg Stock Exchange is expected.

The issuance follows closely on the heels of $2.41 billion of notes in two tranches that the sovereign priced on Jan. 19.

In the Central & Eastern Europe region on the corporate side, Georgia’s JSC Silknet priced $300 million of 8 3/8% five-year senior notes (expected ratings: B1//B) at par, according to a company news release on Tuesday, referring to an issue that was announced to have priced Jan. 20.

Proceeds were used mainly to pay for the call on a prior eurobond.

The new notes are non-callable for two years.

J.P. Morgan Securities plc, UBS Investment Bank and TBC Capital were managers of the Regulation S deal.

The telecommunications company is based in Tbilisi, Georgia.

Moving over to Latin America, Brazil’s Companhia Siderurgica Nacional announced it has priced a $500 million offering of 5 7/8% senior unsecured notes due 2032 (expected ratings: Ba2//BB), according to a company news release.

The issuer of these bonds is CSN Resources SA, the Luxembourg finance subsidiary.

The proceeds of the Rule 144A and Regulation S notes are expected to be used to purchase notes that are tendered in a concurrent tender offer for $300 million of CSN Resources’ outstanding 7 5/8% senior guaranteed notes due 2023 and for general corporate purposes, including liability management transactions.

According to Fitch, the company had planned to offer up to $1 billion of notes.

CSN is a steel producer based in Rio de Janeiro.

Venezuela’s Corporacion Andina de Fomento priced an upsized $650 million of 2¼% five-year senior notes (Aa3/A+/A+) on Tuesday, according to an FWP filing with the Securities and Exchange Commission.

The notes priced at 99.582 to yield 2.339%, or a spread of SOFR mid-swaps plus 85 bps.

The deal size was previously eyed at $500 million.

The notes will be callable only in limited cases for tax reasons.

Listing will be on the London Stock Exchange.

BNP Paribas, Goldman Sachs International, Morgan Stanley & Co. International plc and Nomura International plc are joint lead underwriters for the offering.

Proceeds will be used to invest in high quality short-term debt instruments, the proceeds of which will be used to repay outstanding debt that will mature in the first quarter of 2022.

The development bank is based in Caracas, Venezuela.

Looking ahead, Axian Telecom has selected bookrunners and held global investor calls regarding its inaugural offering of dollar-denominated five-year notes (expected ratings: B+/B+), according to market sources.

The notes are non-callable for two years.

J.P. Morgan, Societe Generale and Standard Bank are global coordinators and joint bookrunners of the Rule 144A and Regulation S deal.

J.P. Morgan is also acting as development finance structuring agent for the offering.

A global investor call was held on Thursday to be followed up by individual investor calls. A benchmark-sized transaction of unsecured notes was expected to follow subject to market conditions.

Axian is a pan-African group that operates in real estate, telecom, finance, energy, open innovation and financial technology. It is based in Madagascar.

In liability management action, Airtel Africa plc subsidiary Bharti Airtel International (Netherlands) BV announced it will redeem early all of its $504,915,000 outstanding 5 1/8% guaranteed senior notes due 2023, according to a notice.

The redemption will occur on March 7 at a price including accrued interest plus a premium to be applied in accordance with the terms of the notes.

The company will fund the redemption from group cash reserves.

Based in the United Kingdom, the telecommunications and mobile money services provider serves 14 countries in Africa.

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