Uruguay Brings Long Bond for LM

Uruguay emerged Tuesday to sell $500m in new 2045 bonds, as part of a liability management exercise aiming to replace shorter-term debt. On the back of a brief US roadshow ending November 2, the Baa3/BBB minus/BB+ sovereign took advantage of cheap rates, and recent rating upgrades, in its first new issuance this year. The 2045 priced at par with a 4.125% coupon, to yield in line with 4.125%-area price talk. The bonds were trading at reoffer in the grey Tuesday afternoon, according to a trader. Demand was heard topping $1bn, and a 10% greenshoe was possible during Asian hours. The level compares to the 3.85% yield seen Tuesday on Uruguay’s 2036 bonds. “Tender prices look fair and give investors incentive to tender. We are given an opportunity to own a new benchmark at market price, though the outstanding 2036 bonds are trading a long way from par,” says a participating London-based EM investor. Though the pricing comes at a level offering less value than other regional long bonds, the investor adds, notably Chile’s 2042. “We like the credit and Uruguay is mostly doing the right thing, but we didn’t see value for that kind of long duration at that level,” adds an EM investor who passed on the deal. Proceeds from Tuesday’s sale will fund part of a tender offer to existing bondholders expiring Friday. Uruguay is targeting $5.02bn outstanding in 12 series of dollar bonds due 2013-2036 with coupons between 7.000%-9.250%. It is also offering cash to holders of $2.72bn outstanding in 12 series of USD and EUR-denominated bonds due 2013-2027 and with coupons of 6.875%-9.250%.The total issuance of 2045 bonds through Tuesday’s sale and the exchange is not to top $2bn total, and the total cash payment in the cash portion of the exchange is not to exceed $500m. BNP Paribas and Citi are managing the process. Uruguay hadn’t issued in the international market since December 2011, when it sold UYP19.91bn ($1bn) in inflation-linked 2028 bonds, also part of an exchange. The sovereign h