Issuance from FirstRand Bank; Petrobras releases financials; Asian issuers give guidance

By Christine Van Dusen

Atlanta, April 23 – South Africa’s FirstRand Bank Ltd. was among the issuers to sell notes on Thursday as Brazil’s Petroleo Brasileiro SA (Petrobras) released its long-awaited audited financial statements for 2014.

The amount of charges related to corruption costs and losses from the electricity sector came to less than $25 billion, a London-based trader said.

That kind of write-down is “still tremendous,” he said. “But it’s much less than the $60 billion total that was being discussed earlier this year. The worst case scenario has been avoided, though problems, of course, remain. We think the short end of Petrobras will continue to grind tighter as the long end widens.”

Liquidity for the company at the end of the year was $2 billion less than the close of the previous quarter, he said.

“This, we believe, is the most positive news,” he said. “Much has been said about Petrobras’ dwindling cash, but with the release of this figure, we have become more comfortable with the company’s liquidity situation. Ultimately Petrobras will come back to the bond market, but we now believe it doesn’t have to be a 2015 event.”

Looking to Asia, most bonds started the day 1 basis point to 3 bps tighter on higher U.S. Treasury yields, another London-based trader said.

But the tone weakened after the London open, and most names closed the day broadly unchanged, he said.

In deal-related news, Korea Resources Corp. and China’s Jingrui Holdings Ltd. set talk for new issues while Panama’s Banco Latinoamericano de Comercio Exterior (Bladex) and China’s Cnooc Ltd. planned roadshows.

Sinopec sees action again

Investors continued to pay attention to the new five-tranche issue of dollar- and euro-denominated notes from China Petrochemical & Chemical Corp. (Sinopec Group).

That deal included $2.5 billion 2½% notes due 2020 priced at 99.576 to yield Treasuries plus 125 bps after talk in the 145-bps area. Those notes traded at 117 bps on Thursday after Wednesday’s 125 bps bid, 123 bps offered.

The 3¼% notes due 2025 that priced at 99.022 to yield Treasuries plus 145 bps, after talk in the 160-bps area, traded Thursday at 141 bps after trading at 146 bps on Wednesday morning.

The 4.1% notes due in 30 years that priced at par to yield Treasuries plus 152 bps, following talk in the 180-bps area, traded at 149 bps on Thursday, following Wednesday’s 152 bps bid, 150 bps offered, he said.

The deal also included 0.5% notes due 2018 that priced at 99.716 to yield 0.596%, or mid-swaps plus 50 bps, following talk of 50 bps to 55 bps, and 1% notes due 2022 that priced at 99.243 to yield 1.113%, or mid-swaps plus 80 bps, matching talk.

Asia in focus

In other trading from Asia, the new 2025 notes from Taiwan’s Formosa Plastics Group, which priced at a spread of 157 bps over Treasuries, moved to 158 bps on Thursday after closing on Wednesday at 160 bps.

Bank of China, HSBC, ANZ and Mizuho Securities were the bookrunners for the Regulation S deal.

“Malaysia continued to do well, with the new Malaysia 10-year and 30-year sukuk a couple basis points tighter,” a trader said. “High-yield sovereigns performed well despite the rates sell-off. The Philippines curve closed ¼ point lower, 4 bps to 6 bps tighter on spread, while the Indonesia curve is down ½ point, or 3 bps to 5 bps tighter on spread.”

FirstRand Bank prints notes

In its new deal, South Africa’s FirstRand Bank priced a $500 million issue of 4¼% notes due April 30, 2020 at 99.617 to yield 4.336%, or mid-swaps plus 280 bps, a market source said.

BofA Merrill Lynch, BNP Paribas, Rand Merchant Bank and Standard Chartered Bank were the bookrunners for the Regulation S deal.

FirstRand is a lender based in Sandton, South Africa.

Guacolda launches bonds

Chile’s Empresa Electrica Guacolda SA launched a $500 million issue of 10-year notes at Treasuries plus 262.5 bps, a market source said.

The notes were talked at a spread in the 300-bps area.

Citigroup, Goldman Sachs and Itau BBA are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repay existing indebtedness, swap breakage costs and transaction fees and expenses.

The notes will include a make-whole call and a three-month par call prior to maturity.

The issuer is a Santiago-based power company.

Korea Resources sets talk

Seoul-based mining company Korea Resources set talk in the Treasuries plus 115-bps area for a five-year issue of benchmark-sized and dollar-denominated notes, a market source said.

BNP Paribas, Citigroup and HSBC are the bookrunners for the deal.

Guidance from Jingrui

Shanghai-based property developer Jingrui Holdings set talk in the 13½% area for a dollar-denominated issue of benchmark-sized notes due in three years, a market source said.

BOSC International, BNP Paribas, Guotai Junan Securities, Haitong International Securities and QILU International Capital are the joint bookrunners and joint lead managers for the Regulation S offering.

Proceeds from the notes will be used to refinance existing debt.

Indonesian deal ahead

Indonesia’s PT Pelabuhan Indonesia II (Persero) (Pelindo II) set talk for an issue of dollar-denominated notes due in 10 and 30 years, a market source said.

The 10-year notes were talked at a yield in the 4 5/8% area.

The 30-year notes were talked at a yield in the 5 5/8% area.

ANZ, BNP Paribas, Citigroup, Bahana Securities and Danareska Sekuritas are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to fund expansion, refinance a syndicate loan and for general corporate purposes.

Pelindo is a Surabaya, Indonesia-based provider of port service facilities.

Bladex sets roadshow

Panama-based supranationa bank Bladex will set out on April 27 for a roadshow to market a possible issue of notes, a market source said.

BofA Merrill Lynch and Citigroup are leading the marketing trip, which will begin in London and Los Angeles and travel to Zurich, Geneva and Boston before concluding on April 29 in New York and Philadelphia.

The Panama City lender was established by the central banks of Latin American and Caribbean countries.

Roadshow for Cnooc jumbo

Hong Kong-based oil and gas exploration and production company Cnooc has mandated Bank of China, Citigroup, Credit Suisse and Goldman Sachs to lead a roadshow for a dollar-denominated jumbo issue of bonds, a market source said.

The Securities and Exchange Commission-registered notes could be issued in dollars and euros.

Africa Finance attracts orders

The final book for Nigeria-based Africa Finance Corp.’s new $500 million issue of 4 3/8% notes due 2020 that priced at 99.027 to yield 4.595%, or Treasuries plus 320 bps, was $4.7 billion from more than 315 investors, a market source said.

About 45% of the orders came from Europe, 32% from the United States, 16% from Asia and 7% from the Middle East. Fund managers picked up 63%, banks and private banks 24% and insurers and sovereign wealth funds 13%.

The notes were initially talked at a spread in the Treasuries plus 350-bps area.

Citigroup, MUFG, Standard Bank and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

The financial services provider is based in Lagos.

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