Morning Commentary: Halkbank notes trade up; ‘upbeat mood’ for EM; Lat-Am improves on low volume

By Christine Van Dusen

Atlanta, July 1 – The new notes from Turkey’s Turkiye Halk Bankasi (Halkbank) traded higher on a pre-holiday Friday as emerging markets assets remained strong.

The Halkbank issue – $500 million 5.05% notes due 2021 that priced Thursday at 99.781 to yield 5.05%, or Treasuries plus 402.5 basis points – moved to 99.90 bid, 100.15 offered on Friday morning, a trader said.

That pushed the new notes about 10 bps above the existing Halkbank 4½% notes due in 2021, which were issued last year.

“One could argue that the old curve could catch a better bid, but I can't see it outperforming the bank space, to be honest,” he said. “From here the trade is just a risk-on asset in a bond with good liquidity.”

Said a London-based analyst: “The bonds now trade in the range we were expecting them to tighten into, but I admit it happened way quicker than I could have imagined.”

Citigroup, Goldman Sachs, HSBC and Unicredit were the joint global coordinators and, along with Bank ABC and Emirates NBD, the bookrunners for the Rule 144A and Regulation S deal.

Looking to Latin America, bonds pushed higher on Friday morning, boosted by the move in U.S. Treasuries, a New York-based trader said.

Colombia-based Ecopetrol SA was “jumping higher again,” he said. “Mexico and Chile high-grade are also seeing nice moves higher in the aggregate. Very little inquiry so far, and Street volumes are also very low, as expected, pre-holiday.”

Overall, emerging markets assets “remain in an upbeat mood,” the analyst said.

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