EM bonds start week on a quiet note; new deals scarce; Pemex widens; Guotai Junan prices

By Rebecca Melvin

New York, Jan. 14 – Emerging markets debt was little changed on Monday as Friday’s less ebullient tone persisted, following a strong secondary market seen much of last week, according to market sources.

There were no new deal announcements heard for the Central & Eastern Europe Middle East and Africa region, and Latin America, which had started to have rumblings of new deals, was also quiet on Monday.

Dubai Islamic Bank PJSC remains the only issuer on the calendar for the MENA region, a London-based source said. And in Latin America, a dollar-denominated note deal for Colombia’s Termocandelaria Power Ltd. is on roadshow through this week. For Asia, Korea’s Kookmin Bank mandated banks and set a roadshow for a U.S. dollar-denominated Tier II sustainability bond last week.

The bonds of Petroleos Mexicanos SAB de CV were flat after slipping on Friday on the heels of non-deal marketing meetings in New York last week.

Pemex’ 6˝% notes due 2027 were trading around 94.25 bid, 94.75 offered on Monday after trading at 95 and as high as 96 on Wednesday.

The state-owned oil company faces possible credit rating downgrades given proposals to upgrade refineries and build new ones on top of its existing heavy debt burden. The company’s plans laid out for investors, analysts and rating agencies last week did little to inspire confidence that the company under Mexican president Andres Manuel Lopez Obrador’s new administration has a clear strategy to chart a more credit-worthy course going forward, according to market sources.

Pemex and Mexico are expected to try to issue benchmark dollar transactions early this year. Pemex last issued $2 billion of bonds in October.

From Asia, Guotai Junan International Holdings Ltd. priced US$200 million 4Ľ% notes due 2022 under its HK$15 billion medium-term note program. The Hong Kong-based investment holding company selected Guotai Junan Securities, ICBC (Asia), Bosc International, OCBC Bank, China Citic Bank International, HSBC and Shanghai Pudong Development Bank Hong Kong Branch as joint global coordinators, joint lead managers and joint bookrunners of the Regulation S deal.

In addition, Future Land Development Holdings Ltd. said it plans to price an offering of U.S. dollar-denominated senior notes under Regulation S. The real estate operator and developer said the deal will be priced subject to market conditions, via bookrunners UBS AG Hong Kong Branch and Merrill Lynch (Asia Pacific) Ltd.

Worse-than-expected economic data from China put a damper on the broader markets in the early going on Monday as investors continue to worry about slowing global economic growth. The data showed that China’s exports and imports both fell in December from a year earlier as the effects of U.S. tariffs started to kick in and demand weakened. U.S. stocks lagged on Monday and closed down, but the major U.S. indexes remain better than they were in December when they touched bear market territory.

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