HNA prices deal; Greece reaches agreement; more tension in Ukraine; China devalues currency

By Christine Van Dusen

Atlanta, Aug. 11 – China’s HNA Capital Holding Co. Ltd. sold notes on Tuesday as some emerging markets assets bounced off recent lows – on the news that Greece had agreed to a bailout deal with its creditors – while others suffered after China made a surprising devaluation of its currency.

“Greek officials have said they expect the agreement to be ratified by parliament on Wednesday or Thursday and then be vetted by euro zone finance ministers on Friday,” according to a report from Schildershoven Finance BV.

Rates remained well-bid and commodities regained some of their recent losses, a London-based trader said.

Bonds from Turkey saw short-covering, leading to slightly tighter spreads and prices that outperformed the rates move, he said.

Asian credits, however, failed to maintain a positive tone, another trader said. The currency devaluation “sent ripples” and caused many names to tumble, another trader said.

Investment-grade cash bonds moved 1 basis point to 3 bps wider after the London open, he said.

“Korea 10-year is still trading heavy,” he said. “India is a touch softer, with the new Icici Bank Ltd. 3 1/8% 2020s trading up at 158 bps.”

Later in the morning the Icici notes moved to 158 bps, then 161 bps bid, 158 bps offered. The notes recently priced at Treasuries plus 160 bps and on Monday closed the Asian session at 160 bps bid, 157 bps offered.

The notes came to the market Aug. 5 via HSBC, Barclays, JPMorgan, BofA Merrill Lynch and Standard Chartered in a Regulation S deal.

Malaysia widens

In other trading from Asia, Malaysia closed 2 bps to 5 bps wider on Tuesday, a trader said.

By the end of the New York session, most other Asian names – particularly in the Chinese corporate arena – had widened between 2 bps and 4 bps, another trader said.

“Very light flow today,” he said. “Weakness was especially apparent in the Korea corporates. We had sellers from banks to motors, from the belly to the 10-year front.”

Ukraine sees activity

From Ukraine, sovereign bonds have been fairly active so far this week, and corporates have seen some two-way flow but not much trading, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

This came amid reports of escalating military tension in southeast Ukraine, where pro-Russian rebels have been accused of carrying out heavy artillery attacks.

Lat-Am in focus

Looking to Latin America, low-beta spreads ended the day wider on weaker investor sentiment, a New York-based trader said.

Five-year credit default swaps spreads for Brazil closed Tuesday at 325 bps from 319 bps, while Mexico’s moved to 135 bps from 132 bps.

Cash prices did manage to advance, he said, and Brazil outperformed.

Venezuela’s 2027s closed at 38.35 from 39 and PDVSA’s 2017s closed at 64¾ from 65¼, he said.

“The ongoing trend of weakening commodities and a strengthening dollar continues to be a concern for markets as we navigate our way through the illiquid summer months,” he said.

HNA prints notes

China’s HNA Capital priced $200 million 4½% notes due 2018 at 99.692, a market source said.

The bonds were issued through BL Capital.

Bank of China, Barclays Capital, Everbright Securities and Guotai Junan Securities were the bookrunners for the deal.

Other details were not immediately available on Tuesday.

The issuer is based in Hong Kong.

© 2015 Prospect News.
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