Turkey's Mersin sells bonds as investors eye US data; First Bank of Nigeria notes perform

By Christine Van Dusen

Atlanta, Aug. 1 - Turkey's Mersin Uluslararasi Liman Isletmeciligi AS (Mersin International Port) sold notes on Thursday as better-than-expected manufacturing data from the United States sent Treasury prices plummeting.

"Crazy day, crazy markets," a New York-based trader said.

The Markit iTraxx SovX CEEME ex-EU index spread on Thursday opened at 230 basis points over Treasuries, tighter by 3 bps. The Markit iTraxx Crossover index spread - seen Wednesday at 405 bps - moved in 10 bps on Thursday.

"Yesterday's better-than-expected second-quarter 2013 US GDP numbers saw US Treasuries sell off strongly to almost 2.7%, but the Federal Open Market Committee statement remained bearish on the economy and was broadly in line with last month's statement," a London-based analyst said. "We expect some selling today ahead of non-farm payrolls tomorrow, but so far Turkey is looking 5 bps tighter, while Central and Eastern Europe are flat."

Overall, the session was "lackluster" for emerging markets debt, a London-based trader said.

"Liquidity is really drying up," he said.

Sovereign bonds from Latin America saw their prices decline on Thursday as economic data from the United States pushed rates higher, another New York-based trader said.

"Spreads end nearly unchanged, with prices off ¾ point to 2 points on medium- to longer-dated bonds."

Some buying in the morning gave way to selling later in the session.

"Volumes are better than prior days but still lighter than prior weeks," he said.

Higher-yielding names continued to outperform, he said.

"As we all know, it's summer and thin," the London trader said. "Some bonds have tightened very nicely on the month. I'm not entirely sure there is much value on some names, but many are happy taking the carry over the summer lull."

Lat-Am corporate prices fall

For some corporate bonds from Latin America, spreads saw some tightening, another New York trader said.

But prices continued to fall with the move in Treasuries, he said.

"Petrobras and Vale SA spreads widened by 5 bps to 10 bps throughout the curve," he said. "Street volumes were strong, actually, especially given the poor overall liquidity. And accounts were better sellers, but not overwhelmingly."

Mersin prices notes

In its new deal, Turkey's Mersin International Port priced $450 million 5 7/8% notes due 2020 at 99.576 to yield 5.95%, following talk of a yield in the low-6% area.

"That's coming slightly wide of Koc Holdings," the analyst said.

Citigroup, DBS Bank and Unicredit Bank were the bookrunners for the Rule 144A and Regulation S deal.

Nigerian bank solid in trading

The new issue from First Bank of Nigeria - $300 million 8¼% notes due 2020 that priced Wednesday at 98.999 - fared well in trading on Thursday, the London-based analyst said.

The notes came to the market at a yield of 8½%, or mid-swaps plus 68.5 bps, via Citigroup and Goldman Sachs in a Rule 144A and Regulation S deal.

"Trading better, at 99¼ to par," she said.

Kipco, ADCB stand out

Other standouts in the secondary market on Thursday included Kuwait-based Kipco's 2020 notes and Abu Dhabi Commercial Bank's notes.

"At least there is some spread to compensate for the US Treasury moves," the London trader said. "Bank paper and also 2016 to 2018 notes are very well sought after. It's getting tricky to replace some names."

National Bank of Abu Dhabi's 2017s saw buyers at 1041/4, he said.

Middle East in focus

Qatar National Bank's 2020 notes were trading Thursday within the 95 3/8 bid, 96 offered context, a trader said.

The recent perpetual notes from Abu Dhabi Islamic Bank, which priced at par, were spotted Thursday at 100¾ bid, 101¾ offered.

Dubai Islamic Bank's perpetuals, which also priced at par, were quoted at 97 bid, 98 offered during the session.

Russian bonds decline

So far this week eurobonds from Russia have declined in price, according to a report from UFS Investment Co.

The sovereign's 2042s have dropped to 103.47% of the nominal value, while the benchmark 2030s dipped to 117.39% of face value, UFS said.

To end the week, "we expect upward dynamics in Russian eurobonds," the report said. "Market mood will again be determined by the US statistics."

© 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.