Argentina’s 100-year bond strengthens; oil stabilizes, still in focus; Isbank, Belarus on tap

By Rebecca Melvin

New York, June 22 – Argentina’s 100-year bonds gained 1.5 points in trade on Thursday, leaving the yield at 7.77%, or 10 basis points tighter since issue on Monday at 7.91%, market sources said.

The new Argentina notes stood at 91.75 at the close Thursday, their high of the day, compared to a reoffered issue price of 90.

Argentina priced $2.75 billion of the 7 1/8% century notes in what market players described as a well-executed deal.

The positive reception to this issue from Argentina – a high-yield credit that defaulted on $80 billion of debt in 2001 – indicates solid investor appetite for higher yielding, longer-dated paper. But whether the deal sets a precedent for Latin America credit remains to be seen. Global energy markets were roiled this week by oil prices that sank into bear market territory.

Oil prices edged up on Thursday but remain at their lowest levels in almost a year. Light sweet crude for August delivery settled up $42.74 a barrel on the New York Mercantile Exchange at 4 p.m. ET. Brent crude oil gained 40 cents, or 0.9% to $45.22 a barrel.

If oil prices were to fall into the low $40 range and remain there for any length of time it would be harmful for Latin America credit markets, a market source told Prospect News. Nevertheless, this week, Mexico’s Grupo Cementos de Chihuahua SAB de CV’s (GCC) priced $260 million of 5¼% notes on Tuesday and Grupo KUO SAB de CV began a roadshow Thursday for $350 million of 10-year notes (/BB/BB). These were small, shorted-dated deals associated with refinancing, however. KUO’s deal is being used to refinance its $325 million of 6¼% notes due 2022. But there may be larger, longer-dated issues in the pipeline.

Mexico’s debt market has had a positive tone recently for a number of reasons including its strong peso, which was 18 to the dollar this week, the impact of the 2014 reforms, which have had a favorable impact over the last couple of years, and hopeful expectations ahead of North American Free Trade Agreement talks expected to begin in August, an economist told Prospect News.

“Fears associated with the Trump effect have subsided,” the economist said.

President Trump officially notified Congress of his intent to renegotiate NAFTA on May 18.

In the Middle East region on Thursday, Turkiye Is Bankasi AS (Isbank) was about to price $500 million of 11-year bonds that were talked at 7% yield, a market source said.

Isbank is Turkey’s largest bank, and financials from this country have been in favor of late.

Citigroup, Goldman Sachs International, MUFG, SG CIB and Standard Chartered Bank are joint bookrunners for the deal.

Also expected to price were two tranches of dollar-denominated debt for the Republic of Belarus, a London-based syndicate source said. The five-year and 10-year tranches were being sold via Citigroup and Raiffeisen Bank International.

And in Asia, Samvardhana Motherson Automotive Systems Group BV is expected to offer €300 million of seven-year senior secured bonds (expected: /BB+/BBB-) following an investor roadshow, set to begin June 26.

The auto parts maker Samvardhana Motherson will offer the notes under Rule 144A and Regulations S.

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