Hungary prices €1 billion notes; Al Khalij Commercial taps banks; Argentina under pressure

By Rebecca Melvin

New York, Sept. 25 –The Republic of Hungary priced €1 billion 1¼% seven-year notes at 98.621 on Tuesday for a yield of 1.457%, or spread of mid-swaps plus 75 basis points, according to a market source.

Pricing was tightened from guidance of mid-swaps plus 85 bps and from initial price talk of mid-swaps plus 100 bps. Initial price guidance was appealing for investors and the order book stood above €3.8 billion when the deal launched.

Hungary’s 2027 notes were trading at 73 bps over mid-swaps, and the Hungary 2029 notes were at 70 bps over mid-swaps, compared to Romania’s 2025 notes, which were trading around 92 bps over mid-swaps.

Hungary was last in the market last October for €1 billion 1¾% notes due 2027.

Joining the forward new deal calendar was Qatar’s Al Khalij Commercial Bank, which will market a dollar-denominated offering of benchmark-sized notes during a roadshow starting on Thursday. The Doha-based lender selected Barclays, ANB Capital, Standard Chartered Bank and The Commercial Bank for the Regulation S notes and roadshow meeting will place in Asia and Europe.

In secondary dealings, the Middle East and Africa region was weighed down slightly by the move in rates but generally quiet, a London-based trader said.

Saudi Electricity Co., which priced a $2 billion sukuk in two tranches last week, was a little heavy ahead of pricing for a new deal for Saudi Arabia’s Saudi Basic Industries Corp. (Sabic), the trader said.

Sabic’s planned dual-tranche offering of notes will be on a roadshow from Wednesday, with proceeds of a resulting deal earmarked to refinance its $1 billion five-year note that matures on Oct. 3 and for general corporate purposes.

Sabic is a maker of chemicals, fertilizers, plastics and metals.

Argentina bonds fell a point or more as the sovereign curve remained under pressure on Tuesday following a drop back on Monday.

Argentina’s central bank president, Luis Caputo, announced on Tuesday afternoon that he is resigning from the central bank ahead of an expected agreement with the International Monetary Fund for a strengthened bailout, just four months after he took the helm in June.

Caputo is being succeeded by Guido Sandleris, a top Finance Ministry official, who has a Ph.D. from Columbia University, specializing in finance, macroeconomics and the international economy.

Argentina’s government is struggling with reform policies, and some feel the economy is heading for a recession after gross domestic product contracted 4.2% in the second quarter.

But its reforms are not popular. On Tuesday, union workers held a strike opposing the government’s plans to cut public spending.

Argentina’s bonds started to drop back on Monday amid reports that the nation is close to clinching a larger IMF loan and President Mauricio Macri’s statement on Monday that there is “zero chance” Argentina would default on its debts next year.

The pull back is coming on the heels of a rally for much of September after Argentina debt and its currency sunk to lows at the end of August.

The Argentina 5 7/8% dollar notes due 2028 were around 80 early in the session and closed 80.9 after touching 81.5 on Monday.

Investors are worried that even it more IMF funding is forthcoming, it does not change the challenges that face Macri in reforming the economy and maintaining support ahead of the next presidential election slated for October 2019.

Venezuela bonds were unchanged with low liquidity on the heels of new U.S. sanctions announced on Tuesday against Venezuelan President Nicolas Maduro and his inner circle, including his wife First Lady Cilia Flores, Vice President Delcy Rodriguez, Communications Minister Jorge Rodriguez and Defense Minister Vladimir Padrino.

© 2015 Prospect News.
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