CSI Properties prints notes; ‘whippy’ trading of EM; Brazil outperforms; ADB advances deal

By Christine Van Dusen

Atlanta, Aug. 2 – China’s CSI Properties Ltd. sold notes on Tuesday as trading of emerging markets assets was “whippy” and some cash prices improved.

“EM credit sees a whippy trading session, with different issuers diverging in big ways,” a New York-based trader said. “Brazil continues to outperform and has five-year credit default swaps unchanged at 294 basis points. Brazil cash prices surged late in the day, with offers being ripped off the screens.”

Brazil’s 2026s closed at 111.30 from 110.70, the 2025s closed at 99.60 from 99.10, and the 2047s ended at 97.10 from a low of 95.75.

Some sellers emerged but the market ended higher on Wednesday, he said.

Mexico’s CDS closed at 158 bps from 155 bps, he said.

“Cash bonds felt particularly heavy all day,” he said. “Mexican sovereign [bonds] were not alone in this weakness, as [Petroleos Mexicanos SAB de CV] was also very well offered.”

Venezuela took a hit on oil weakness, he said, with the sovereign's 2027s closing at 47.50 from 48.25, and PDVSA’s 2017s finishing at 76.50 from 77.20.

Argentina’s Bonar 2024s closed at 115.70 from 116.125, and the 2026s went out at 107.60 from 108.50, he said.

“Flows saw better sellers of Mexico and Pemex and buyers of Brazil and Uruguay in the sovereign space,” he said.

Looking ahead, “it remains very busy outside and in [emerging markets],” a London-based analyst said. “Outside, we are awaiting the nonfarm payrolls figures for July this Friday while the Bank of Europe will announce its interest rate decision on Thursday.”

Turkey in focus

In news from Turkey, Moody’s Investors Service is expected to review the sovereign’s rating on Friday after putting it on downgrade review.

“Any update would provide us however with potentially more guidance for the weeks ahead,” he said. “It will be key to assess whether political risk has increased and how this might affect capital flows, future economic growth and economic policy implementation.”

Turkey’s bonds have recently experienced a small relief rally after widening, he said.

“Turkey will be able to avoid a shutdown of its access to capital markets, given the still resilient economic fundamentals,” he said. “This should support Turkey’s rating at the current levels, but we also acknowledge that a potentially looming downgrade could become a self-fulfilling prophecy if it increases financing costs.”

Egypt seeks loan

Investors were also watching Egypt, as an International Monetary Fund team continued to hammer out terms for a loan to the sovereign, which is seeking $12 billion over the next three years to fund a gap of $21 billion.

“Fitch yesterday published a comment, saying that such IMF funding would be credit-positive but warned about high implementation risks,” the analyst said. “Most notably, IMF support could be politically contentious in Egypt and some opposition to a deal is expected.”

CSI sells bonds

In its new deal, China’s CSI Properties sold $250 million 4 7/8% notes due Aug. 8, 2021 at par to yield 4 7/8%, according to a company filing.

HSBC, UBS, DBS Bank, BofA Merrill Lynch and Sun Hung Kai Investment Services were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance debt.

CSI is an investment holding company based in Hong Kong.

ADB to tap notes

African Development Bank is looking to tap its dollar-denominated 1% notes due May 15, 2019, according to a company filing.

RBS and BNP Paribas are the bookrunners for the deal.

The original $1 billion issue priced in April at 99.639.

The issuer is based in Abidjan, Ivory Coast.

© 2015 Prospect News.
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