India’s Icici lines up deal; Russian CDS flatten; volumes thin; Ethiopia notes decline

By Christine Van Dusen

Atlanta, Dec. 8 – Indian bank Icici Bank Ltd. planned new notes on a Monday that saw credit default swaps spreads for Russia flatten, following the previous week’s massive widening of the country’s corporate bonds.

Not even hopes of a ceasefire in Ukraine or the news that the sovereign had made a payment to Russia-based OAO Gazprom could budge bonds much, a London-based analyst said.

“Liquidity is almost non-existent,” he said. “We would expect this lack of liquidity to now persist until at least year-end.”

Turkey started Monday’s session a bit weaker, with credit default swap spreads widening 5 basis points and sovereign bonds moving out between 2 bps and 5 bps, he said.

“This follows strong performance in recent weeks,” he said.

In other news from Turkey, Istanbul-based lender Turkiye Vakiflar Bankasi TAO (Vakifbank) has applied to issue up to $5 billion of bonds, a market source said.

The bonds are expected to be denominated in various currencies and maturities.

“We think Vakif will consider a new-style Tier 2 instrument to support capital ratios,” the source said.

In other trading, bonds from the Middle East were mostly tighter as a result of the move in U.S. Treasuries, the analyst said.

The new issue of notes from Ethiopia – an upsized $1 billion issue of 6 5/8% notes due in 2024 that priced at par – opened on Monday about ¾-point below reoffer, he said.

“After some initial interest after the launch, buyers have dropped away from the bond,” he said.

Deutsche Bank and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Meanwhile, bonds from Dar al-Arkan Holdings were under pressure, widening about 10 bps.

“We are struggling to find a motive for the move,” he said.

LatAm sovereigns widen

Looking to Latin America, sovereign bonds opened Monday lower and wider, a New York-based trader said.

Brazil’s 2025s printed at 100.80 following Friday’s close of 101.05, he said. The 2023s were seen at 91.25.

Colombia’s 2044s started the session at 112, down from Friday’s 112.25. Mexico’s 2044s were seen at 102.80 and its 2045s at 114.80, both down about 25 cents from Friday.

Bonds from Argentina and the short end for Venezuela-based PDVSA, however, were mostly unchanged, he said.

The intermediate and long end of PDVSA’s curve opened lower, following weaker oil prices, he said.

Brazilian corporates weaken

Bonds from Brazil’s Petroleo Brasiliero SA and Vale SA opened wider on Monday, another New York-based trader said.

Other Brazilian corporates were weaker amid very thin liquidity and volumes, he said. Selling dominated the activity that did take place.

Asian assets firm

From Asia, bonds closed Monday’s session with a firm tone amid support from Treasury spreads, a London-based trader said.

High-grade bonds were mixed, he said, and bonds from high-yield property companies from China were unchanged.

“High-yield sovereigns opened a ¼-point to ½-point lower, but we’ve seen buyers on the dips in the long end,” he said. “The curve closed ¼-point lower across.”

Malaysia-based mortgage company Cagamas Bhd.’s recent issue of 2.745% notes due 2019 that priced at par traded down, he said.

CIMB, HSBC, RHB Bank and Standard Chartered were the bookrunners for the deal.

Icici to print tap

Monday also saw India’s Icici Bank Ltd. announce a plan to print up to $200 million of notes in a tap of its 3½% bonds due March 18, 2020, a market source said.

The original issue priced in September at 99.653 to yield Treasuries plus 180 bps with BofA Merrill Lynch, Citigroup, Deutsche Bank and HSBC.

“The existing bonds were marked a couple of bps wider,” a trader said. “Given the new deal would relieve some pressure off the shorts, I think the bonds will price around 160 bps over.”

Bonds from the rest of India were strong on Monday, tightening between 3 bps and 5 bps, he said.

“Korea ended the day a touch softer, with bonds coming out in the shorter end,” he said.

State Bank of India prices

In deal-related news, State Bank of India (London branch) priced a $100 million issue of 3.95% notes due Dec. 24, 2024 at 99.2206 to yield 4.045%, or Treasuries plus 175 bps, according to a company announcement.

The notes were sold via reverse inquiry.

The bank is based in Mumbai.

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