Turk Telekom notes edge higher; Venezuela crisis eyed; LatAm secondary flows slower

By Rebecca Melvin

New York, Feb. 22 – Turkey’s Turk Telekomunikasyon AS’s newly priced 6 7/8% notes traded slightly higher on Friday after the Ankara, Turkey-based telecom company priced $500 million of the six-year notes at 99.396 to yield 7%, or a yield spread of mid-swaps plus 440.4 basis points.

The new Turk Telekom notes were quoted at 99.75 bid, 100.25 offered.

They priced tight to guidance of 7 1/8% to 7¼% yield and initial price talk in the 7 3/8% yield area.

Order books at the time of guidance were in excess of $2 billion.

Pricing also emerged on Bahrain Mumtalakat Holding Co. BSC’s $600 million five-year Islamic bonds, which were reoffered at par to yield 5 5/8%, or a spread of 315.9 basis points over U.S. Treasuries.

Pricing was at the tight end of guidance of 5¾%, plus or minus 1/8%, and that was tightened from early guidance in the 6% area and initial price talk in the 6¼% area.

This past week brought a number of new emerging markets debt issues for the Middle East and Central & Eastern Europe, but Latin America and Africa were quiet. U.S. financial markets were closed on Monday in observance of Presidents Day.

The week also saw a firm secondary space, and heading into the weekend there was relative calm. But market players were watching Venezuela, where a political crisis was heating up, with expectations of a possible showdown to occur between President Nicolas Maduro and the U.S.-backed opposition leader Juan Guaido as soon as this weekend.

On Friday, Venezuela military forces fired on protesters along the border with Brazil, killing one woman and injuring 15 people, as protestors attempted to reopen the border, according to reports.

Maduro has closed the borders with Brazil and Colombia to prevent foreign aid from entering the country. He claims the humanitarian aid is being used as wedge in the battle to make him step down as president.

This weekend two concerts are planned for Saturday on either side of a bridge that connects Venezuela and Colombia. One was organized by billionaire Richard Branson to raise awareness and funds for Venezuelan relief. And the other concert was organized by the Maduro government and is called Hands Off Venezuela.

U.S. market players cannot trade the bonds of Venezuela or Petroleos de Venezuela SA due to U.S. sanctions against those entities.

“Until the OFACS removes the sanctions, nothing is going to happen. There is no trading, there are no prices,” New York-based trader said, referring to the U.S. Office of Foreign Assets Control.

“I think it is another step on the right path,” the trader said, regarding the Guaido plan to increase pressure on Maduro with the international aid issue. “Whether it will remove Maduro from office this weekend is not a sure thing. It is part of the process, and I expect we will see more action and another step,” the trader said.

The trader said that he is concerned about the risk of increased violence with these political moves. “It can get really violent as they try to cross the bridge, the Venezuelan army will react against them.”

Otherwise the secondary market has seen slower flows in the Latin America region, the trader said, attributing the lessening of activity to the influence of lighter new issuance and uncertainty related to the U.S.-China trade talks.

Market players are interested to know if the trade war has put a dent into China demand, the trader said.

© 2015 Prospect News.
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