Primary sees Petrobras; sentiment weakens; Turkey under pressure; IDC, Egypt prep issues

By Christine Van Dusen

Atlanta, Jan. 9 – Brazil’s Petroleo Brasileiro SA approached the primary market on a Monday that saw sentiment among emerging markets investors weaken in the wake of the United States’ job report and oil price volatility.

Sentiment “started to wane on Friday in the aftermath of the job market report,” a London-based analyst said. “As we get into the first full week in 2017, markets remain somewhat cautious.”

Against this backdrop, the government in Ivory Coast agreed to improve pay and living conditions for its army following an uprising.

“In heated negotiations, the country’s Defense Minister was briefly held by soldiers before President Ouattara announced the deal,” the analyst said. “The situation has reportedly calmed down, with soldiers having returned to their barracks, although tension remains high as they wait for their pay. A similar uprising by the military already took place in 2014.”

Meanwhile, Turkey remained under pressure as the government continued to fight militants.

“The parliament recently approved the extension of the state of emergency by three months in an ongoing purge against the Gulen movement,” he said. “In addition, the economy is facing headwinds amid increasing energy prices and a further weakening in the lira.”

Some market-watchers were also keeping an eye on Yingde Gases Group Co. Ltd. after the company received a preliminary offer from Air Products & Chemicals Inc.

“It has a preliminary, non-binding interest in acquiring all outstanding shares of Yingde Gases Group Co., subject to conditions,” according to a report from Schildershoven Finance BV. “The news should support Yingde Gases’ eurobonds. However, the price volatility may remain in near future.”

Petrobras advances deal

For its new deal, Brazil’s Petrobras – via Petrobras Global Finance BV – set talk for a two-tranche issue of notes due in five and 10 years, a market source said.

The five-year notes were talked at a yield in the 6˝% area and the 10-year bonds were talked in the 7ľ% area.

The notes were expected to price as soon as late Monday, a syndicate source said.

Banco Bradesco BBI, Citigroup, HSBC, Itau BBA and Morgan Stanley are the joint bookrunners for the deal.

The proceeds will be used to fund tender offers for several series of notes. Petrobras Global Finance is offering to pay up to $2 billion, excluding interest.

The remaining proceeds will be used for general corporate purposes.

Petrobras is an energy company based in Rio de Janeiro.

Egypt sets roadshow

In other deal-related news, Egypt will set out on Jan. 17 for a roadshow to market an issue of eurobonds, a market source said.

The sovereign was previously expected to issue notes before the end of 2016, but a deal never materialized.

Finance Minister Amr El-Garhy previously said that the government was looking to issue up to $6 billion of notes in 2017.

Other details were not immediately available on Monday.

IDC to issue dollar bonds

Investment Corporation of Dubai (ICD) is planning to issue a benchmark-sized and dollar-denominated notes this month, a market source said.

Citigroup, Emirates NBD, HSBC, JPMorgan, National Bank of Abu Dhabi and Standard Chartered are the bookrunners for the deal, which may or may not be a sukuk issuance.

ICD is a sovereign wealth fund.

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