EM debt drags lower as U.S. stocks, oil slide; Abu Dhabi’s Senaat plans new sukuk; Thaioil, Kexim price

By Rebecca Melvin

New York, Nov. 20 – Emerging markets debt was dragged down on Tuesday as U.S. stock markets continued to sell off and oil prices resumed their downward trajectory.

“All spreads are struggling today; all are under pressure,” a London-based trader said.

Despite the market volatility, a deal was announced for Abu Dhabi-based Senaat General Holding Corp. PJSC, which has selected banks and scheduled fixed-income investor meetings for a planned five- to seven-year Islamic bond, or sukuk.

The industrial investment holding company mandated Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, First Abu Dhabi Bank and Standard Chartered Bank as the joint lead managers and bookrunners arranging the meetings for the senior unsecured debt. Meetings are scheduled starting on Wednesday in the United Kingdom, and continuing three more days in China and the Middle East.

Proceeds of the Regulation S deal are earmarked to repay existing debt.

Meanwhile, final pricing regarding a number of issues for the Asia region emerged. A subsidiary of Thai Oil PCL priced $1 billion of notes in two tranches under Rule 144A and Regulation S. The $400 million tranche of 2028 notes priced to yield 4 5/8%, and the $600 million tranche of 2048 notes priced to yield 5 3/8%.

In addition, the Export-Import Bank of Korea (Kexim) priced $1 billion of short-dated notes due 2021 and 2023. The $500 million of 3½% three-year notes priced at 99.983, and the $500 million tranche of 3 3/8% five-year notes priced at 99.444.

And Times China Holdings Ltd. priced $300 million senior notes due 2020 at 99.912 to yield 10.95% on Monday. Times China, a property development holding company, based in Guangzhou, China, plans to use proceeds to refinance existing debt and for general working capital.

In the broader markets, U.S. stocks sold off again, with the day’s losses wiping out gains for 2018 for the Dow Jones industrial average and S&P 500 stock index. Financial stocks joined technology shares in the fray, but the down draft also took down retail, and other sectors, and energy tanked amid the slide in oil prices.

The Dow fell 551.80 points, or 2.2% to 24,465.64, a large loss that followed Monday’s drop of 395.78 points, or 1.6%. The S&P 500 dropped 48.84 points, or 1.8%, to 2,641.89, extending a drop of 45.5 points, or 1.7%, on Monday. And the Nasdaq stock index fell another 119.65 points, or 1.7% to 6,908.82, after plunging 219.4 points, or 3% on Monday.

After several days of positive moves, oil prices succumbed to pressure on Tuesday and the price of West Texas Intermediate crude oil for December was crushed, closing down 6.6% to $53.43 a barrel on the New York Mercantile Exchange.

Oil prices have been dropping on concerns regarding unexpected supply. This has in turn weighed on many exporters. Petroleos Mexicanos SAB de CV’s 6½% notes due 2027 down to 91.875, which was down from 93.2 on Monday, according to Trace data. Pemex’s 6¾% notes due 2047 were last trading lower at 82 from 83 on Monday.

But Brazil’s Petroleo Brasileiro SA was steadier, with its ultra-long 2115 bond noticeably lower, but the rest of the curve holding in better. Petrobras’ 6¼% notes due 2024 were last 101.6, which was only about 0.25 point weaker on the day. The Petrobras 8¾% bonds due 2026 were actively trading around 112.5, which was the same context from the previous session. And Petrobras’ 6.85% bonds due 2115 were jumping around, but last 88.125, which was lower compared to trades of 89 to 89.5 on Monday.

© 2015 Prospect News.
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