Primary hosts Venezuela’s CAF, Baosteel; EM spreads mixed; investors like recent issues

By Christine Van Dusen

Atlanta, Jan. 21 – Venezuela’s Corporacion Andina de Fomento (CAF) and China’s Baosteel Resources International Co. Ltd. were among the issuers to print notes on Wednesday as Russia’s spreads widened, Turkey’s narrowed and few Latin American credits saw action.

From Russia, violence continued in the Ukraine conflict zone, even as foreign ministers were set to meet for talks in Berlin.

“A breakthrough is unlikely,” a London-based analyst said.

This, plus the downgrade of several corporate issuers by Moody’s Investors Service, helped push credit default swaps spreads 15 basis points wider, he said.

Looking to Turkey, the country’s Central Bank cut rates on Tuesday, which tightened credit default swaps spreads by 1 bps that day and led buyers to some banking credits.

“This morning, Turkey CDS is 1 bp wider,” he said.

Spreads for bonds from Central and emerging Europe were mostly unchanged on Wednesday as market watchers whispered about upcoming issues from Romania and Poland.

Latin American bonds started the day off at a slow pace before activity picked up for only a handful of bonds, a New York-based trader said.

“Little to no customer appetite at any spot on the curve,” he said.

High-grade names from Chile managed to perform well while banks from Peru moved higher, he said.

In trading from the Middle East, high-yield names continued to lag while long-dated assets attracted interest, the analyst said.

“Still very limited supply, but with investment-grade spreads remaining strong, and given where rates are, one can only assume new deals must be imminent,” he said. “Spreads are opening a little tighter, but the region feels stable overall.”

Middle East in focus

Taking a closer look at the Middle East, spreads tightened overall amid lower rates but zero issuance, a London-based trader said.

“Active enough day, flow-wise, with balanced inquiries,” he said. “Still have the general themes of high yield and perpetuals struggling and investment-grade and lower-beta names doing well.”

Dubai Islamic Bank’s recent perpetuals traded at 99.87, after hitting a low of 98¾ on Monday.

Meanwhile, bonds from ¾ perked up, with the 2044 dollar bonds trading at 94¾ after a low of about 92 earlier this month, he said.

Asian rally continues

Asian bonds continued to rally on Wednesday, with high-grade names closing as much as 5 bps tighter, a London-based trader said.

China attracted buyers, and its oil names closed 1 bp to 3 bps tighter.

“China high-grade property also rebounded,” he said.

From Korea, buyers were spotted for Export-Import Bank of Korea (Kexim) and Woori Bank.

And bonds from India were firm, with spreads narrowing 2 bps to 5 bps, with financial names outperforming.

“But new supply is capping gains,” he said.

Huarong encounters demand

Recent issues from Asia quieted down on Wednesday, a trader said.

China-based Huarong Asset Management Co. Ltd.’s new five- and 10-year notes were 2 bps to 3 bps tighter with good demand sighted on the 10-years, he said.

The $1.2 billion notes due 2020 priced at Treasuries plus 310 bps, following talk of 320 bps.

The $1.4 billion notes due 2025 priced at Treasuries plus 360 bps, following talk of a spread of 370 bps.

The deal also included $600 million three-year notes that priced at Treasuries plus 270 bps after talk was set at 280 bps.

Credit Suisse, Standard Chartered Bank and Wing Lung Bank were the joint global coordinators. ABC International, BOC International, Bocom International, CCB International, China Merchants Securities, Citigroup, Credit Suisse, DBS Bank, Deutsche Bank, HSBC, ICBC, Jefferies, Morgan Stanley, Standard Chartered Bank and Wing Lung Bank were the joint bookrunners and joint lead managers for the Regulation S deal.

Philippines trades up

The new issue of notes from the Republic of the Philippines – 4.2% notes due Jan. 21, 2024 that priced at par to yield 4.2% – traded up at 112½ but saw “fast money come out at these levels,” a trader said.

So the notes closed the Asian session at 112 1/8 bid, 112 3/8 offered.

Deutsche Bank, HSBC and Standard Chartered Bank were the joint lead managers for the Securities and Exchange Commission-registered transaction.

The joint lead managers and bookrunners were ANZ Securities, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and Standard Chartered Bank.

The proceeds will be used to fund a tender offer and for expenses incurred in that transaction, as well as for general governmental purposes.

Indonesia sees action

Indonesia’s new 2045 bonds moved to a high of 105 7/8 before heading to 105½ and closing at 105 3/8 bid, 105 5/8 offered, a trader said.

The 4 1/8% 10-year notes priced at 99.393 to yield 4.2%, following talk in the 4¼% area.

The deal also included $2 billion 5 1/8% 30-year notes that priced at 98.867 to yield 5.2%, following talk in the 5¼% area.

Citigroup, HSBC and Standard Chartered Bank were the bookrunners for the deal.

“The belly of the curve is ¾ point higher,” he said.

Issuance from CAF

In its new deal, Caracas-based lender CAF priced $1 billion floating-rate notes due Jan. 29, 2018 at par to yield Libor plus 55 bps, a market source said.

Barclays, Credit Agricole CIB, Daiwa Capital Markets Europe and Deutsche Bank were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general corporate purposes, including the funding of the company’s lending operations.

Baosteel prices bonds

Shanghai-based and state-owned iron and steel company Baosteel priced $500 million 3 7/8% notes due Jan. 28, 2020 at 99.488 to yield 3.989%, a market source said.

Commonwealth Bank of Australia and National Australia Bank Ltd. were the bookrunners for the Regulation S deal.

Reliance launches notes

India’s Reliance Industries launched a $1 billion issue of 10-year notes at Treasuries plus 240 bps, a market source said.

The notes were talked at a spread in the 165-bps area.

Barclays, Citigroup, Deutsche Bank, JPMorgan and Morgan Stanley are the active bookrunners for the Rule 144A and Regulation S deal.

ANZ, BNP Paribas, Credit Agricole and RBS are the passive bookrunners.

Reliance Industries is a Mumbai-based petrochemical and retail conglomerate.

Launch from Colombia

Colombia launched a $1.5 billion issue of notes due in 2045 at a spread of Treasuries plus 262.5 bps, a market source said.

JPMorgan and Morgan Stanley are the bookrunners for the Securities and Exchange Commission-registered deal.

The notes will be callable, and the proceeds will be used for general budgetary purposes.

Dominican Republic sells bonds

Late on Tuesday, the Dominican Republic priced a two-tranche issue of $2.5 billion bonds due Jan. 27, 2025 and 2045, a market source said.

BofA Merrill Lynch and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The transaction included $1 billion 5½% notes due in 2025 that priced at par to yield 5½%, following talk in the 5.65% area.

The $1.5 billion 6.85% notes due 2045 also priced at par, following talk in the 7% area.

The proceeds will be used for general purposes, including the refinancing, repurchase or retirement of domestic and external indebtedness.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.