China XD Plastics prints bonds; risk aversion takes hold for EM investors; spreads widen

By Christine Van Dusen

Atlanta, Jan. 24 - China XD Plastics Co. Ltd. sold notes on Friday, ending a week that started off with spread-tightening and ended with a sell-off and reduced risk appetite for emerging markets bonds.

"One only has to look at U.S. Treasuries and EM currencies to see the extent of the risk reduction currently being witnessed," a London-based analyst said.

Investors are taking a defensive stance, she said, in part due to poor data from the United States and China.

By Friday, weakness was seen among Turkey's banks and corporates, with lenders ending the week 27 basis points wider, the analyst said.

"All Turkish corporates end the week wider, with Koc Holdings' 2020s 48 bps wider and Tupras 2018s 46 bps wider, affected by the news it would need to pay a fine for breaching competition rules," she said.

From Russia, Sberbank and Vnesheconombank were among the underperformers.

"However, there was still demand for certain bonds, namely Russian Agricultural Bank '21 subs, which are 9 bps tighter, and Credit Bank of Moscow '18s," she said. "Russian corporates were circa 15 bps wider on the week."

OAO Gazprom's dollar paper suffered while its euro paper outperformed, she said.

Bond spreads from the Middle East were impacted at the end of the week, in line with emerging markets, she said.

"Bank spreads have been more resilient, circa 9 bps wider on average," she said.

In deal-related news on Friday, Singapore's Mohamed Mustafa and Samsuddin Co. Pte. Ltd. set initial talk and Guatemala's Comunicaciones Celulares SA (Comcel) was on a roadshow.

Middle East in focus

In other trading from the Middle East, Dubai Holding's 2017 sterling notes were marked lower on Friday, trading at 104½ bid, 105 offered, a London-based trader said.

"Good old Lebanon," he said. "Holding steady."

Emirates Islamic Bank saw its 2049 bonds widen by 28 bps.

"In terms of sovereigns, Qatar and Bahrain have both performed well this week," he said. "In corporates, investors have become aware of the limited upside that perpetual paper offers."

Looking to Africa, Angola's 2019 bonds were spotted at 107.81 bid, 108.31 offered, he said.

China XD Plastic prices notes

In its new deal, China XD Plastics priced $150 million 11¾% notes due 2019 at 99.08 to yield 12%, a market source said.

Morgan Stanley, UBS, HSBC and China Minsheng Banking were the bookrunners for the Rule 144A and Regulation S deal.

The issuer is a Harbin, Heilongjiang-based manufacturer of engineering resins.

Mustafa gives guidance

Singapore-based retail company Mustafa set initial talk in the high-4% area for its planned issue of Singapore dollar-denominated notes due in three years, a market source said.

And Guatemala-based is on a roadshow for a dollar-denominated issue of notes.

The roadshow for the Rule 144A and Regulation S deal began on Friday.

Citigroup, Credit Suisse and Morgan Stanley are arranging the trip.

Turkey deal oversubscribed

The final book for Turkey's recent issue of $2.5 billion 5¾% notes due 2024 that priced at 99.251 to yield Treasuries plus 299.20 bps was $9.3 billion, a market source said.

About 66% of the orders came from the United States, 12% from Europe, 10% from Turkey, 10% from the United Kingdom and 2% from others.

Fund managers accounted for 77%, banks and private banks 16%, insurance and central banks 7%.

Dalian Wanda attracts orders

Also oversubscribed was China-based Dalian Wanda Commercial Properties Ltd.'s $600 million 7¼% notes due 2024 that priced at 99.036 to yield 7.388%, or Treasuries plus 455 bps.

The deal brought in $3 billion in orders, with 83% from Asia and 17% from Europe.

Fund managers picked up 67%, banks 10%, private banks 9%, insurers 6%, sovereign wealth funds 5% and corporates 3%.

BofA Merrill Lynch, Barclays, Goldman Sachs, HSBC, UBS were the bookrunners for the Regulation S deal.

Fibra Uno does deal

On Thursday, Mexico's Fibra Uno priced a two-tranche issue of $1 billion notes due in 2024 and 2044 in a Rule 144A and Regulation S deal, a market source said.

The deal included $600 million 5¼% notes due 2024 that priced at 99.752 to yield Treasuries plus 250 bps.

The second tranche of $400 million 6.95% notes due Jan. 30, 2044 priced at 97.088 to yield Treasuries plus 350 bps.

BBVA, Credit Suisse, Deutsche Bank and Santander were the bookrunners for the deal.

The proceeds will be used to repay indebtedness and for general corporate purposes.

Fibra Uno acquires, develops and operates commercial real estate in Mexico.

© 2015 Prospect News.
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