CSI Properties, Hysan Development sell bonds; deals from Hopson, Indika, Lithuania on deck

By Christine Van Dusen

Atlanta, Jan. 9 - China's CSI Properties Ltd. and Hysan Development Co. Ltd. sold notes on Wednesday as emerging markets assets experienced healthy but not quite so voracious demand as overall risk appetite declined on disappointing data from the United States and Europe.

The unemployment rate has risen to an all-time high in the euro area, though borrowing rates are at lows, according to a report from Barclays.

So some emerging markets credits suffered a little bit, particularly in corporate Latin America. But other names - Qatar, Russian Railways and Russia's Alfa Bank, for example - remained attractive.

"Very good demand," a London-based trader said. "Had regional accounts topping up positions most of the morning. Some bonds are almost scary on the offer side, meaning there is no offer."

The Markit iTraxx SovX index spread was wider by 1 basis point while the corporate index was unchanged.

Meanwhile, deal flow was a bit more subdued than earlier in the week, with China's Hopson Development Holdings Ltd., Indonesia's PT Indika Tbk and Lithuania planning bonds.

"Supply, I suspect, is around the corner," a trader said. "However, as we've seen of late, new issues have had a habit of reinvigorating curves."

In trading, Kuwait-based Kipco and Burgan Bank were tighter on Wednesday, as were notes from issuers in Dubai.

And International Petroleum Investment Co. (IPIC) and Qatar were well bid, an analyst said.

IPIC's 2017s, 2020s and 2021s saw demand while the company's 2018s through 2041s were between 35 bps and 50 bps on the month, the London-based trader said.

Qatar's 2018s moved above 101 to close at 101 1/8 bid, 101 3/8 offered on Wednesday.

TAQA notes widen

Also from the Middle East, Abu Dhabi National Energy Co. (TAQA) saw its 2023s soften during the week, widening about 14 bps.

"It was getting pretty squeezed there and is really only coming back to the curve," the London-based trader said. "One has to go out very long on the TAQA, IPIC, Qatar and DPWorld curves to get north of 4%. Lebanon, I think, still offers some value versus peer groups, but granted, it is not for every investor."

Lebanon's 2013s were trading Wednesday at 100.37 bid, 101.37 offered while its 2027s were quoted at 101¾ bid, 102¾ offered.

"While valuations may, on face value, look rich, it's very tricky being short some of these names and still versus parts of Asia there is some value," he said.

Middle East in focus

In other trading from the region, Dubai-based Emaar Properties' 2019s continued to look good while Jordan's bonds seemed to struggle a bit, a trader said.

"Bahrain still offers a little value. In fact, it's trading well," he said. "Bahrain traded well right from the word 'go' and closes 5 bps to 8 bps tighter."

Saudi Electricity Co.'s notes were 12 bps tighter on the week, closing at about 109 after last week's print of 108 1/8.

"Dubai Holding is still seeing ongoing demand," he said.

And Abu Dhabi Islamic Bank's recent perpetual notes, which have been very popular in trading, lost a little luster on Wednesday.

"They were unchanged on the day," he said.

Demand for African bonds

From Africa, activity was limited but demand remained for many bonds, a trader said.

"Gabon traded early at 123," he said. "Late in the day Egypt's 2020s traded with a 102 handle."

The latter sovereign's 2040s were bid at almost par.

"A 55 bps-move tighter over the month for this credit," he said.

Notes from Zambia and Angola were about 70 bps tighter, and Morocco's notes were almost 80 bps better on the month.

"Morocco's 2042s last printed at 105," he said. "The 2022s feel well supported."

LatAm slows down

Looking to Latin America, the recently gangbusters corporate arena has slowed down a bit, a New York-based trader said.

After December's tremendous run, there has been a slight pullback on many credits.

Brazil's Vale SA and Brazil's Petroleo Brasileiro SA (Petrobras) have seen spreads widen during the last few sessions, particularly on the long end.

"That's sending prices down dramatically," he said.

But this is probably just "a breather" for Latin American credit, he said.

"The new issue market will begin to take shape for the new year and there are a number of deals on tap for late this week and next week," he said.

Vimpelcom bonds decline

Quasi-sovereign issues from Russia opened Wednesday about a quarter-point lower, the London analyst said, pointing to Sberbank and VTB.

"Higher-beta names like Vimpelcom are down 5/8 of a point," she said.

Outperformers included Russian Railways and Alfa Bank, she said.

"We are still seeing retail investor interest for Gazprom," she said. "This started happening as equities turned down yesterday and the first new issues started printing."

Ukraine ticks lower

From Ukraine, eurobonds have been following the general market mood, said Svitlana Rusakova of Dragon Capital.

The sovereign's 2017s were seen a ¼ point lower while the 2021s declined to 105 bid, 106 offered and the 2022s slipped to 102 bid, 103 offered.

"Naftogaz weakened to 104 bid, 105 offered," she said. "Meanwhile, corporate names remained strong."

CSI, Hysan price notes

In its new deal, Hong Kong-based real estate company CSI Properties priced a $150 million issue of 6½% notes due Jan. 16, 2018 at par to yield 6½%, a market source said.

The notes priced in line with talk, set at the 6½% area.

Bank of America Merrill Lynch and JPMorgan were the bookrunners for the Regulation S deal.

The notes were guaranteed by Estate Sky Ltd.

The primary market also saw China-based property developer Hysan Development price a $300 million issue of 3½% notes due Jan. 16, 2023 at 99.766 to yield 3.528%, a market source said.

HSBC, JPMorgan and UBS were the bookrunners for the Regulation S-only deal.

Hopson gives guidance

In other news from China, real estate company Hopson Development has set initial price talk at 10½% for a planned issue of dollar-denominated notes due in 2018, a market source said.

UBS and ICBC Asia are the bookrunners for the Regulation S-only deal, which is seen as unique, given the Caa1 rating from Moody's Investors Service and CCC+ from Fitch.

Indonesia-based energy company Indika is planning a dollar-denominated issue of 10-year notes to be issued through wholly owned subsidiary Indo Energy Finance II BV, a market source said.

The notes will be guaranteed by Indika and subsidiaries Indika Inti Corpindo and Tripatra Entities, according to a report from Moody's Investors Service.

And Lithuania is planning an issue of bonds with bookrunners Barclays and Citigroup.

Turkey deal oversubscribed

The final book for Turkey's new $1.5 billion issue of 3¼% notes due March 23, 2023 was $3.5 billion from 173 investors, a market source said.

The notes priced Tuesday at 98.093 to yield 3.473%, or mid-swaps plus 155 bps.

"Some loose bonds around," the analyst said. "It should go OK."

BNP Paribas, Deutsche Bank Securities and Goldman Sachs International were the bookrunners for the Securities and Exchange Commission-registered deal.

About 45% of the orders came from the United States, 20% from Turkey, 12% from the United Kingdom, 21% from other European nations, and 2% from other countries.

Funds picked up 68% and banks 32%.

The proceeds will be used for general financing purposes, which may include the repayment of debt, according to an SEC filing.

© 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.