Market widens as equities, oil prices slide; REC, AVIC bring mandates for dollar deals

By Paul A. Harris

Portland, Ore., Oct. 23 – Emerging markets debt weakened on Tuesday against a backdrop of a global selloff in stocks and falling crude oil prices.

The Dow Jones industrial average fell more than 400 points on the morning but recovered a great deal of that amount in the afternoon.

The barrel price of West Texas Intermediate crude for December 2018 delivery fell 4.4% on the day, to $66.31, down $3.05.

Petroleo Brasileiro SA (Petrobras), which rallied over the past month, was 5 to 10 basis points wider heading into the New York midday, a syndicate banker said.

Geopolitical headlines were unsupportive.

Polarizing accusations in the run-up to Brazil’s contentious Oct. 28 presidential elections continued to dominate headlines there, a market source said.

And the Turkish lira took a dive on news headlines that Turkish nationalists may be prepared to abandon their alliance with Turkish President Recep Tayyip Erdogan.

REC mandate

The primary market was generally quiet on Tuesday.

Last week saw a flurry of activity in the Latin America primary market, with six issuers tapping the market for a total of $4.82 billion, the syndicate banker said.

Away from Latin America, India’s REC Ltd., formerly known as Rural Electrification Corp., mandated Barclays, Citigroup, HSBC, JPMorgan, MUFG and Standard Chartered Bank to arrange meetings with fixed-income investors ahead of an anticipated benchmark dollar-denominated bond deal.

Meetings were scheduled to get underway on Tuesday in Asia, Europe and the United States.

A Rule 144A and Regulation S offering of five-year and/or 10-year notes, to be issued under the global medium-term notes program, may follow, pending market conditions.

AVIC International roadshow

Shanghai-based AVIC International Leasing Co. plans to start a roadshow on Wednesday for a dollar-denominated Regulation S bond offer (Fitch: A-).

Bank of China, Barclays, China International Capital Corp., DBS Bank, Haitong International, Agricultural Bank of China Hong Kong branch, China Citic Bank International, First Abu Dhabi Bank, ICBC (Asia) and Mizuho Securities are managing the sale.

The issuing entity will be Soar Wise Ltd.

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