Primary hosts Paraguay, TMB Bank, YIG; oil, equity sell-off weakens some EM; Turkey tightens

By Christine Van Dusen

Atlanta, March 23 – Paraguay, Thai Military Bank (TMB Bank) and China’s Yunnan Provincial Investment Holdings Group (YIG) sold notes on a Wednesday that saw some risk assets weaken in light of the oil and equity sell-off and volumes taper off ahead of the Good Friday holiday.

“Odd day today, as the general weaker tone has been offset by the cash inflows that need to be put to work,” a trader said.

Said another trader, “Overall this market continues to trade well. Easter holidays this weekend, before we arguably head into a key couple of months before Ramadan. The window for the much-rumored and talked-about supply is surely post-Easter and pre-Ramadan.”

Most Latin American notes opened a bit softer on Wednesday but finished on solid footing, a New York-based trader said.

Brazil-based Vale SA was an exception, moving about 1½ points lower amid “light but consistent selling,” he said.

Colombia’s Ecopetrol SA was still well-bid, with the market supporting steady, moderate selling during the past three days, he said.

“Not all credits weakened due to the lack of volumes and activity in general, and tomorrow’s short session might not show us any additional direction as a barometer,” another trader said.

From the Middle East, perpetual bonds remained popular and well off their lows, a London-based trader said. Among them was Dubai’s Majid Al Futtaim Holding LLC and Kuwait’s Burgan Bank, which both have moved more than 100 basis points tighter over the month.

“Solid tone and good support,” the London trader said.

Turkey in focus

Looking to Turkey, bonds opened about 5 bps tighter and sellers were seen for long-dated paper as controversy continued for several corporates, a trader said.

“The curve is too flat, in our view, with duration having outperformed substantially,” he said. “We think it makes sense to cut risk at current levels by selling the long end and buying the belly, if you wish to stay exposed. The curve is unlikely to flatten any more unless we have a substantial idiosyncratic risk in Turkey.”

Bonds from the sovereign have been “remarkably resilient” amid controversy at Halkbank, ISCTR, a possible rate cut, ongoing fighting at the border, the migrant crisis and terror attacks, another trader said.

But “start to dig a bit deeper, and the flows tell another story,” he said later in the morning. "Buyers have thinned out or are focused on the short-end, and the sovereign curve has given back the 5 bps to 6 bps of tightening."

DIB trades up

Dubai Islamic Bank PJSC’s new $500 million issue of 3.6% notes due 2021 that priced at par to yield mid-swaps plus 230 bps was seen trading at 100.20 bid, 100.30 offered, a market source said.

The notes were initially talked at a spread in the 245-bps area.

ABC, Dubai Islamic Bank, HSBC, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The final book was $1.2 billion from 87 investors, with 62% from the Middle East, 20% from Europe and 18% from Asia.

Bank took 43%, fund managers 35%, supranationals and agencies 16% and private banks and insurers 6%.

Later on Wednesday, the new were seen at 100¼ bid, 100½ offered.

Paraguay prints notes

In its new deal, Paraguay priced an upsized $600 million issue of 5% notes due April 15, 2026 at 99.997 to yield 5%, or Treasuries plus 312.7 bps, a market source said.

BofA Merrill Lynch and Itau were the bookrunners for the deal, increased from $500 million.

The proceeds will be used for financing of infrastructure and debt, as well as for capital expenditures.

Thailand’s TMB sells bonds

Thailand’s TMB Bank sold $300 million 3.1% notes due Oct. 1, 2021 at par to yield 3.1%, or Treasuries plus 170 bps, a market source said.

The notes were talked at a spread of 170 bps to 175 bps.

HSBC, ING and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The lender is based in Bangkok.

YIG does deal

In another new deal, China’s YIG printed $300 million 3 3/8% notes due April 1, 2019 at 99.748 to yield 3.464%, or Treasuries plus 240 bps, a market source said.

Bank of China International, China Minsheng International, UBS, BOC International, Quam Securities, Shanghai Pudong Development Bank, CCB International, ANZ and AMTD were the bookrunners for the Regulation S deal.

The issuer is a Kunming-based supplier of steel, iron ore, coal, sand and gravel that also works in transportation, construction, technology and other sectors.

Hong Kong Airlines talks tap

Hong Kong Airlines set talk at 99.75 for a tap of its dollar-denominated 6.9% notes due in 2019, a market source said.

The original $180 million issue, via Blue Sky Fliers Co. Ltd., came to the market in January at 99.071 to yield 7¼%, following talk in the mid-7% area.

Guotai Junan International, JPMorgan, BOC International and Hong Kong International Securities are the bookrunners for the Regulation S deal.

The proceeds will be used for general corporate purposes.

Korea Resources sets roadshow

Korea Resources Corp. will set out on March 29 for a roadshow to market a possible issue of notes, a market source said.

BofA Merrill Lynch, BNP Paribas, Citigroup and HSBC are leading the roadshow.

Korea Resources is a mining company based in Seoul, South Korea.

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