High volumes at quarter-end; Lat-Am mixed; Isbank trades; Global Ports, Eldorado eye deals

By Christine Van Dusen

Atlanta, March 31 – Emerging markets assets put in a hectic, high-volume session on a volatile Thursday as, at quarter-end, investors awaited new payrolls data from the United States.

But “at this point, with all the dovish Central Bank-speak, tomorrow’s data may not matter all that much,” a trader said.

Latin American bonds once again saw varying degrees of performance, with names like Brazil’s Gerdau SA climbing higher, a New York-based trader said.

Also moving up were Brazil-based Vale SA, banks from Colombia, and Colombia’s Ecopetrol SA.

“And there are credits that are struggling to hold recent gains,” he said. “Brazil-based Braskem SA has moved lower again today, and there has been better selling throughout this week, as the market might be thinking they have a few skeletons in the closet, given their ties to a local corruption scandal.”

Weak demand from locals, along with a strengthening currency in Brazil, didn’t help matters, he said.

“But overall metrics look OK,” he said.

Banks from Mexico seemed to be “sitting in neutral,” he said, “although we still see scattered buying.”

Mexico-based Cemex SAB de CV moved higher “after small gains the previous few sessions, but client inquiry remains even, and the Street seems long the 2026s, which are having trouble moving higher,” he said.

Spreads initially tightened for the region but saw a late-day reversal, led by Brazil, another trader said.

Brazil’s five-year credit default swaps spreads closed at 367 basis points from 355 bps, while Mexico’s moved out to 162 bps from 157 bps.

“Cash prices away from Brazil do finish higher as quarter- and month-end buying kicks into full gear, which also coincided with a late-day, similar move in the U.S. Treasury market,” he said.

High-yield Lat-Am mixed

High-yield names from Latin America were mixed on Thursday, with Venezuela’s 2027s mostly unchanged at 40 and PDVSA’s 2017s closing at 53 from 52.75.

Argentina’s Bonar 2024s closed at 108.10 from 108.25, the trader said.

“Flows today heavily skewed towards better buyers of all Lat-Am paper,” he said. “We did see some small sellers emerge very late in the day once spreads were trading at the wides.”

Isbank sees some action

The new issue of notes from Turkey’s Turkiye Is Bankasi AS (Isbank) – $750 million 5 3/8% notes due 2021 that priced at 99.540 to yield mid-swaps plus 420 bps – opened on Thursday at 99.80 bid, 100.05 offered, a trader said.

Deutsche Bank, HSBC, ING, JPMorgan and Societe Generale are the bookrunners for the Rule 144A and Regulation S deal.

“The new Isbank opens firm as we continue the risk-on theme,” another trader said. “As expected, the $3 billion Isbank book is full of fast money just happy to make a quick 50 cents, but there is demand for risk and it’s decent two-way flow so far.”

Banks seek Russian guarantees

Looking to Russia, the government is not expected to give foreign banks any guarantees on how they will use proceeds from an upcoming eurobond placement, according to a report from Schildershoven Finance BV.

“The funds will replenish the Russian budget, and afterwards it will be almost impossible to trace the sources of money,” the report said. “On the other hand, the government could create a special fund or account, but we are not sure it will be consistent with the local legislation.”

International banks are reportedly asking the Russian government to provide a letter of guarantee that proceeds from the sovereign eurobond placement won’t be used for funding banks and companies that are on the sanction list, the report said.

“The letter should help them to ignore recommendations of the U.S. and the E.U. governments not to participate in the bond placement,” Schildershoven said.

Vimpelcom could face pressure

Also from Russia, bonds from OJSC Vimpelcom could face some challenges as the European Union probed the company’s proposed merger with CK Hutchison Holdings Ltd.’s Italian mobile telecommunications business.

Antitrust regulators are concerned that the deal could create higher prices and fewer choices by reducing the number of operators, a market source said.

“The news on the in-depth E.U. probe on the [deal] may put some pressure on Vimpelcom’s and Wind Telecom’s eurobonds,” Schildershoven said.

Global Ports sets roadshow

Russia-focused Global Ports Investments plc will commence a roadshow on Friday for a possible issue of notes, a market source said.

The roadshow will be held in Europe and the United States.

Cyprus-based Global Ports operates the container terminal that serves Russian cargo flows.

Eldorado to issue notes

Brazil’s Eldorado Brasil Celulose SA is looking to issue $500 million of notes this year, a market source said.

The notes are likely to carry a maximum maturity of seven years.

Other details were not immediately available on Thursday.

Eldorado is a Sao Paulo-based pulp producer.

© 2015 Prospect News.
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