Metalloinvest launches; Indian Bank plans $500 million; EM funds see $872 million inflows

By Paul A. Harris

Portland, Ore., July 14 - Emerging markets debt ended the Thursday New York session basically flat, as players digested good news and bad news on the financial front, according to Enrique Alvarez, IDEAglobal's head of research for Latin America.

The EMBI Plus index finished at 283 basis points bid, 6 bps tighter on the day.

Factoring in a four-point sell-off in Treasuries, the EMBI was still a touch tighter, Alvarez said.

Brazil's 11% bonds due in 2040 improved half a point, on a price basis, to finish at 136.30 bid.

In the primary market Metalloinvest Finance Ltd. launched $750 million of five-year senior notes (Ba3//B-) with a 6½% yield.

Indian Bank teed up a $500 million offering of medium-term notes (/BBB-/BBB-), setting a Friday roadshow start.

And global emerging markets debt funds saw $872 million of inflows for the week to Wednesday, according to a weekly report from EPFR Global, a market source said.

Europe's impact on LatAm debt

Early in the Thursday New York session, news that Italy managed to auction bills - some of them bearing 15-year maturities - saw equity prices improve, IDEAglobal's Alvarez noted. That positive news was tempered somewhat by suspicions, on both sides of the Atlantic, that the European Central Bank may have participated in the auction.

Later in the session the U.S. central bank threw a bucket of cold water on the stock market when Fed chairman Ben Bernanke dashed hopes that he might kick off a new round of quantitative easing anytime soon.

As to the impact that the ongoing financial strife in Europe is having on Latin American debt, it depends where on the quality curve you are looking, Alvarez said.

High-quality credits, such as Brazil, have had only a moderate reaction to Europe.

However the higher beta LatAm credits, such as Argentina and Venezuela, although they traded flat on Thursday, have demonstrated somewhat less resilience to negative headlines about European sovereigns.

"They're the high-beta names, and they have been the most active," Alvarez said.

"When you have all of these sovereign events you're bound to get knee-jerk reactions to the higher-beta credits.

"Argentina and Venezuela rallied on news that Greece had passed its austerity program, but then dropped on subsequent negative news about Italian and Irish sovereign debt."

Metalloinvest launches at 6½%

The primary market remained mostly quiet on Thursday.

Russia's Metalloinvest Finance launched $750 million of five-year senior notes (Ba3//B-) with a 6½% yield.

The deal, which had been talked earlier at 6½% to 6 5/8%, was expected to price on Thursday; however, no terms were available at the New York close, a market source said.

Credit Suisse, JPMorgan and VTB Capital are the global coordinators. Those banks, along with BNP Paribas, Bank of America Merrill Lynch, Royal Bank of Scotland, SG CIB and Troika Dialog, are the joint bookrunners.

Around the finish of the European session, at which time the order book for Metalloinvest was closed, the $750 million deal was playing to $2.75 billion of orders, according to a London-based buyside source.

Indian Bank starts Friday

Meanwhile Indian Bank will begin a roadshow on Friday for up to $500 million of medium-term notes (/BBB-/BBB-).

The roadshow is set to wrap up on Tuesday.

Citigroup, HSBC, RBS and Standard Chartered are leading the deal.

The Chennai, India-based lender plans to use the proceeds to fund the bank's international operations and for general corporate purposes.

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