Kazakhstan, Turkey, Baidu, Suzano, Tocumen price; Naftogaz, RusHydro, Klabin plan deals

By Rebecca Melvin

New York, Nov. 9 – The emerging markets debt market saw an assortment of new issues price this past week, while a new batch announced roadshow meetings to garner investor interest for possible pricing next week.

Kazakhstan kicked off this past week with €1.05 billion of five-year and 10-year notes that priced well tight of initial price thoughts on Monday and subsequently traded up.

The sovereign priced €525 million of 1.55% notes due 2023 that were quoted at 100.85 bid, 101 offered on Tuesday after the notes priced at par.

The €525 million of new Kazakhstan 2 3/8% notes due 2028 were seen at 100¾ bid, 100.95 offered on Tuesday after also pricing at par.

The new notes traded well after initially being talked at 1 7/8% to 2% yield for the five-year notes and at 2 5/8% to 2¾% for the 10-year notes.

The order book at the time guidance was released was for €4 billion with a slight skew to the five-year notes. The large order book size portended positive trading, a market source said.

The sovereign initially talked the deal at a single tranche of 10-year notes.

Baidu Inc. priced $1 billion of notes (A3//A) in two tranches. The $600 million of 4.375% notes due May 14, 2024 priced at 99.802 to yield 3.895%, or Treasuries plus 125 basis points, and the $500 million of 4 3/8% 10-year notes priced at 99.546 to yield 4.446%, or Treasuries plus 160 bps.

Also in Asia, PT Indonesia Asahan Aluminium (Persero) priced $4 billion of senior notes in four tranches due 2021, 2023, 2028 and 2048 (Baa2//BBB-), according to a syndicate source on Friday.

Joint bookrunners of the Rule 144A and Regulation S notes were BNP Paribas, Citigroup and MUFG (joint global coordinators) along with CIMB, Maybank, SMBC and Standard Chartered Bank.

Brazil’s Suzano Papel e Celulose SA priced a $500 million tap of its 7% senior notes due 2047 on Tuesday. The new notes priced at 101.842 to yield 6.85%, and the 7% notes, which is now $1 billion in size, traded well after issue. Suzano plans to use the proceeds for general corporate purposes.

Bank of America, BNP Paribas, JPMorgan, Mizuho and Rabobank were joint bookrunners of the Rule 144A and Regulation S deal.

The issuing entity is Suzano Austria GmbH, which is guaranteed by Suzano Papel e Celulose, a pulp and paper company based in Salvador, Brazil.

And the Republic of Turkey woke up emerging markets debt on Wednesday with a new offering of euro-denominated 2026 notes. The new notes came to market less than a month after the sovereign priced $2 billion five-year notes in the middle of October.

The new €1.5 billion of Turkey notes were priced to yield 5¼%, or a yield spread of mid-swaps plus 456.4 bps. That was tight to initial talk in the area of 5½%.

Also pricing on Wednesday was Panama’s Aeropuerto Internacional de Tocumen which came with a $650 million tap of its 6% notes due 2048. The new 6% notes priced at 97.203 to yield 6¼%.

On Thursday, Central American banking group Promerica priced $200 million of 9.7% notes due 2024. The notes priced at 98.754 to yield 10%, which was in line with initial price talk.

But the Latin America market has seen some deal postponements. Most recently, they include a planned dollar-denominated green bond for Guatemala’s Corporacion Multi Inversiones and a planned U.S. dollar-denominated benchmark of intermediate notes for Investimentos e Participacoes em Infraestrutura SA (Invepar), a Rio de Janeiro-based transport infrastructure concessions company.

Roadshows announced

Looking ahead, Nigeria has mandated banks and scheduled fixed-income investor meetings for a planned offering of U.S. dollar-denominated notes, pricing possibly next week.

Citigroup and Standard Chartered Bank were mandated to arrange investor meetings, that were expected to start on Monday and wrap up on Wednesday.

Nigeria was last in the emerging-markets debt market in February when it priced $2.5 billion of 12- and 20-year eurobonds that priced at par to yield 7.143% and 7.696%, respectively.

For the Central & Emerging Europe region, Naftogaz of Ukraine announced that it plans to price dollar-denominated five-year notes. The Kiev-based oil and gas company is holding fixed-income investor meetings in the United States and London.

Latvia-based Mogo Finance SA opened books for a proposed add-on to its 9½% notes due 2022, Mogo has an existing €50 million issue of the 9½% notes. Proceeds of the bond issue will be used to refinance existing loans from peer to peer marketplace, so-called Mintos debt.

Settlement of the Regulation S transaction is expected in mid-November.

The market also eyed Russia’s PJSC RusHydro, which selected banks and has scheduled fixed-income investor meetings about ruble-denominated loan participation notes with a three-year to five-year maturity and a possible three-year renminbi-denominated “Dim Sum” loan participation note.

And from the Middle East, NMC Healthcare LLC announced a proposed dollar-denominated five-year note.

HSBC and Standard Chartered Bank are joint global coordinators and joint lead managers along with Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Bank ABC, Barclays, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank and Noor Bank as joint lead managers.

The Abu Dhabi-based healthcare chain and distribution company does business in the United Arab Emirates.

In Latin America, Brazil’s Klabin SA announced that is has selected banks and scheduled fixed-income investor meetings for a dollar-denominated notes offering that will be sold via bookrunners Bank of America, Bradesco, HSBC, Itau and Morgan Stanley.

Investor meetings will be held through Nov. 13, with a Rule 144A and Regulation S deal following possibly as soon as Wednesday.

Klabin is a Sao Paulo-based pulp, paper and paper products company.

In secondary market dealings, Mexico’s bond spreads remained wider after they were rocked by news the country’s president elect is canceling a $13.3 billion airport project, which has $6 billion of bonds tied to it and was already one-third of the way done.

While virtually all of Mexico’s paper moved wider on “all the noise...it seems to have found some place of stability at current levels,” a New York-based market source said on Monday.

The decision sparked fears that Andres Manuel Lopez Obrador may not honor other contracts or investor-friendly policies.

Whether AMLO, as the president elect is known, hurt the debt new issue market is difficult to say, but, he “definitely rocked the market as far as Mexico is concerned and caused more overall cautiousness in Latin America [debt] specifically,” the market source said.

“Prospective Mexican corporate issuers are affected as it has a created an environment of heightened uncertainty in Mexico,” the source said. “And yet, some discounting of his comments is still being done until the team comes into office.”

AMLO has said that his reasons for canceling the project are because the budget cost is overvalued and because of corruption plaguing the contractor processes.

About the $6 billion of airport bonds outstanding there is much speculation on whether the bonds will be paid or restructured and, if restructured, by how much.

In addition, Fitch Ratings said that canceling the project will cost about $5 billion, although AMLO says his alternative of renovating and expanding the existing airport will save money in the long run.

Fitch lowered its outlook on Mexico’s sovereign debt rating to negative from stable last week, citing “policy uncertainty.”

Mexico’s currency and much of the bond space has lifted from lows notched last week, but they have not yet recovered to their levels prior to the cancelation bombshell.

Petroleos Mexicanos’ 6½% bonds due 2027 stood at 97.60 late Monday, which is up from below 97 last Tuesday but below the price tag of more than 98 that this bond received the week before.

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