Slovenia sells bonds; Turkey notes in focus; Trump, Fed, oil on market’s mind; Egypt ahead

By Christine Van Dusen

Atlanta, Jan. 20 – Slovenia sold notes and Turkey’s new issue received attention on Friday as U.S. Treasuries ticked higher on comments from the Federal Reserve and investors focused on the presidential inauguration of Donald Trump.

In its new deal, Turkey on Wednesday priced $2 billion 6% notes due March 25, 2027 at 98.858 to yield 6.15%, or Treasuries plus 375.7 basis points after talk in the 6.2% area.

Barclays, Citigroup, Goldman Sachs and QNB Capital were the bookrunners for the Securities and Exchange Commission-registered deal.

“The timing and macro backdrop [of Turkey’s deal] split investor opinion, but in the end that 6.15% yield pulled in the punters,” a London-based trader said. “United States Treasuries continue to add some spice, but overall EM has shrugged it off, absorbed supply and motors on, for now.”

The comments from Federal Reserve Chair Janet Yellen, supporting gradual raising of interest rates, were good for emerging markets credit, a London-based analyst said.

“Market activity will however remain tepid ahead of Trump’s inauguration today,” he said. “Moreover, once inaugurated, Trump is expected to sign several executive actions to potentially reverse some of his predecessor’s orders, although there are no further details.”

Oil prices were also on the market’s mind and ended the week about 1% lower amid concerns that a boost in U.S. shale could outweigh production cuts by OPEC and non-OPEC producers.

“Saudi Arabia’s Energy Minister reiterated that producers under the agreement were in compliance, with some already cutting beyond their committed levels,” the analyst said. “On the other hand, he indicated that there would likely be no need to extend the deal beyond the already agreed six months.”

Looking ahead, Egypt is expected to be the next sovereign issuer, following Monday’s conclusion of a roadshow for up to $2.5 billion in multiple tranches.

Slovenia prints notes

In its new deal, Slovenia priced a €1 billion issue of 10-year notes and a €300 million tap of its 3 1/8% notes due Aug. 7, 2045, a market source said.

The €1 billion 1¼% notes due in 2027 priced to yield mid-swaps plus 63 bps.

The €300 million 3 1/8% notes due in 2045 priced at mid-swaps plus 112 bps.

Slovenia most recently tapped the 2045 notes in September of 2015, with €275 million notes pricing at 3.154% yield, or mid-swaps plus 155 bps. That brought the total issue size to €575 million.

Abanka, Barclays Bank, Credit Agricole, HSBC and UniCredit were the bookrunners for the new deal.

Other details were not immediately available on Friday.

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