We now have the initial price guidance for two new issues that we said last week were coming to the market.
Intercorp Peru Ltd is expected to price a 10-year US$300mn senior unsecured bond (no grow), due 2029 and rated BBB-/BBB-, today. The proceeds are likely to be used to purchase any and all of Intercorp Peru's existing US$250mn 5.875% senior unsecured bonds due 2025, which trade at cUS$104.856 (ALLQ) to yield (to maturity) c4.86% (g-spread 303bps; z-spread 306bps), yielding (to worst) 2.24% (g-spread 19bps; z-spread 3bps).
The initial price guidance for the new issue is T + 237.5bps, which we regard as tight, as has been the case for most issues that have come to the markets recently, with a few exceptions.
In Brazil, Cosan Ltd (BB-/BB-) is expected to come to the market with a "benchmark size" new senior unsecured issue, with a 10-year maturity (non-call 5). This will fund the tender offer of its US$500mn 5.95% notes due 2024 that trade at cUS$106.428 (ALLQ) to yield c2.96% (to worst) for a g-spread of 103bps and a z-spread of 96bps, or a yield to maturity of 5.58% (g-spread 276bps; z-spread 278bps).
The new bonds are likely to price in the "high 5.0%s", which we believe is fair.
Finally, yesterday's sovereign issues from the United Mexican States, or Mexico (MEX), priced as follows:
- The US$270mn tap of the 4.50% bonds due 2029, priced T + 165bps; and
- The new US$1bn 30-year bond due 31 January 2050, priced at T + 195.5bps.
These two issues were also on the tight side, in our view.