Nomos-Bank, Impsa, Edenor, Banco de Oro sell notes; weekly fund inflows hit $1.5 billion

By Christine Van Dusen

Atlanta, Oct. 15 - Emerging market bond investors and issuers succumbed to fatigue, leading to a mostly quiet and weaker Friday that had only a handful of deals. Friday's subdued tone followed a post-holiday week filled with new issuance and aggressive buying.

The day saw Nomos-Bank from Russia, Industrias Metalurgicas Pescarmona SAIC (Impsa) and Empresa Distribuidora y Comercializadora Norte SA (Edenor) from Argentina and Banco de Oro Unibank Inc. from the Philippines sell notes while several recent issues did moderately well on the day.

Overall, though, the market was generally "a bit weaker," according to a market source, who focuses primarily on Russian credits.

"After a generally strong session yesterday, today is quiet and a little weaker. Treasuries and the stock market are lower, and my bonds are weakening and widening as well," he said. "I think we're down now because stocks are down. What's causing that, I don't know. We've had a great run."

Clearly there's been "a lot of new issuance in Latin America, Eastern Europe, Asia, the Middle East," he said. "So you can't go on forever like that."

BDO, Impsa sell notes

Adding to the list of new deals was Philippines-based lender and SM Investments Corp. subsidiary Banco de Oro Unibank, which priced $300 million 3 7/8% senior unsecured notes due April 22, 2016 at 99.632 to yield 3.95%, or Treasuries plus 278.5 basis points, a market source said.

Citigroup and UBS were the bookrunners for the Regulation S transaction.

Also selling notes on Friday was Nomos-Bank, with $400 million bonds due Oct. 21, 2013 coming to market at par to yield 6½%, or Treasuries plus 592 bps, a source said.

Nomos-Bank, RBS and UBS were the bookrunners for the Regulation S transaction.

Argentina-based Impsa, a producer of wind and hydropower equipment, priced a $50 million add-on to its existing $275 million 10 3/8% notes due Sept. 30, 2020 at 99.00 to yield 10.538%, a market source said.

Bank of America Merrill Lynch and UBS were the bookrunners for the Rule 144A and Regulation S deal. The original issue priced in September at 97.736 to yield 10¾%.

Edenor, Ukreximbank print deals

Argentina-based electricity producer Edenor priced $140 million notes due Oct. 25, 2022 at par to yield 9¾%, a market source said.

Deutsche Bank and JPMorgan were the bookrunners for the Rule 144A and Regulation S transaction, which is non-callable for eight years.

Proceeds will be used for refinancing, capital expenditures and working capital.

This followed Wednesday's deal from Ukraine-based lender Ukreximbank, which priced a $250 million tap of its existing $500 million 8 3/8% notes due April 27, 2015 at 103.298 to yield 7½%, a market source said.

Credit Suisse was the bookrunner for the Regulation S deal, which was talked at 7½% to 7 5/8%.

BicBanco hot before roadshow

As an illustration of just how attractive EM assets are these days, a London-based trader pointed to the upcoming five-year senior notes planned by Brazil-based lender Banco Industrial e Comercial SA (BicBanco) via Citigroup, Itau and JPMorgan in a Rule 144A and Regulation S transaction.

Even before the start of the roadshow, set for Monday and Tuesday in London and New York, one of the banks involved put out a whisper in the high 5% area and said that $200 million of orders had already been received.

"It's supposed to be a $300 million deal," the trader said. "So yeah, there's a lot of demand out there."

Recently priced issues have done fairly well, another London-based trader said, including the $500 million 6¼% notes due 2040 from Indian petrochemical company subsidiary Reliance Holding USA Ltd. that priced this week at 99.024 to yield 6.323%, or Treasuries plus 240 bps.

The deal's other tranche - $1 billion 4½% notes due 2020 that priced at 99.538 to yield 4.558%, or Treasuries plus 205 bps - "is not doing so well," he said. "It's off a little bit."

Up "a bit" on the day were the $600 million 6¼% notes from China-based tree plantation operator Sino-Forest Corp. that recently priced at par, he said.

Recent issues mixed

At the same time, the $2 billion issue of senior notes due 2016 and 2020 that priced Thursday from Dubai Electricity and Water Authority - with $500 million 6 3/8% notes due 2016 pricing at par and $1.5 billion 7 3/8% notes due 2020 pricing at par - "traded a little heavy down to 99.625," a market source said. "It closed at 99.5 bid, 99.75 offer on the '20s and 99.65 bid, 99.85 offer on the '16s."

But the $1 billion 6.7% notes due 2017 from Russia-based steel and mining company Severstal, which priced Thursday at par to yield Treasuries plus 487.1 bps, fared a bit better. The issue was trading in the gray market on Thursday night at "between par and a half and 101," a market source said.

On Friday it "didn't do anything new," he said. "It's still a point and a half higher. I think that's decent. If you went into the deal, you're still looking at a half-point of profit on where it came. It depends on how greedy you are."

Posco on tap

Next week is expected to be a busy one for EM, a market source said, and could see several deals pour out of the pipeline.

One source said he was keeping an eye out for the upcoming dollar-denominated bonds of up to $700 million from Korea-based integrated steel producer Posco.

"They were one of the first in late March or April of 2009 to reopen the EM market," he said. "It kind of reopened things. It's really tight now, though. It's far less interesting now. Back then investors were still terrified of many things, including Korea. Now people are not as concerned about anything, especially Korea."

In other news, inflows into emerging market bond funds totaled $1.5 billion for the week ended Oct. 13, according to data tracker EPFR Global. That pushed the year-to-date total to north of $41 billion.

"In contrast to last year, when retail investors accounted for over 80% of the total inflows into this fund group, institutional investors have been responsible for over 50% of the money committed so far this year," EPFR said in its report.

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