Mexico’s Bancomext, Norilsk Nickel do deals; spreads narrow a bit; IDBI seeks to issue

By Christine Van Dusen

Atlanta, Oct. 6 – Mexico’s Banco Nacional de Comercio Exterior, SNC, Institucion de Banca de Desarrollo (Bancomext) and Russia’s OJSC MMC Norilsk Nickel sold notes on Tuesday as investors in Asian credits embraced risk, with cash bonds holding on to gains and most spreads tightening slightly.

China-based Cnooc Ltd. saw its 2025s trade as tight as 187 basis points before closing the early session at 191 bps bid, 188 bps offered, 8 bps tighter.

“Korea closed a couple tighter, as it lacked real-money support given the all-in yields are still too low,” a trader said. “India was 3 bps to 5 bps tighter, with buyers in five-year financials.”

As the day went on, trading was “very active” for Asian assets, another trader said.

“Indonesia and Philippines began to see profit-taking as paper gapped during the last two sessions,” he said. “China is mixed, with small buyers in property and technology but sellers in oil.”

Paper from Malaysia, he said, was “volatile.”

Still, volume was mostly light for Asian assets, he said.

“The Dow was very choppy throughout the day, causing Treasuries to close towards the day high," he said.

Bonds from Turkey opened a few basis points tighter on Tuesday, with better prints in the belly of the curve, after trading on Monday with balanced demand and as much as 25 bps of curve tightening, a trader said.

Turkish banks and corporates saw supply get slowly soaked up, he said, as the Street became less aggressive in offering paper.

“I expect us to consolidate some of the gains, which have been mainly macro-driven,” he said.

Spreads tighten slightly

Debt spreads from Latin America moved a little bit tighter on Tuesday, with Brazil’s five-year credit default swaps spreads closing at 410 bps from 412 bps and Mexico’s at 150 bps from 152 bps, a New York-based trader said.

Profit-taking left most bonds at levels similar to Monday’s, he said.

Bonds from Venezuela finished the session lower, while Argentina’s squeaked higher, he said.

PDVSA’s 2017s closed at 67.25 from 68 and underperformed, he said.

“Good two-way flows for the session, with not much conviction seen either way,” he said.

Petrobras cuts investment plan

In other news from Latin America, Brazil-based Petroleo Brasileiro SA was once again in the news, this time after cutting its investment plan by 11% and announcing that oil and gas output plans would not change.

“This is positive news for the company, as management continues to increase its operational efficiency,” according to a report from Schildershoven Finance BV. “Additionally, the company confirmed its asset sale program for 2015 and 2016. This announcement will support the national bond market.”

Lat-Am in focus

In other news from Brazil, the country’s audit committee was preparing for a vote on Wednesday while the top electoral court was scheduled to decide whether to open hearings for President Dilma Rousseff. She has been accused of illegally financing her re-election campaign.

Bonds from Peru “remain at elevated levels, with yesterday’s context,” and buyers emerged for the 2025s and 2027s while sellers sought to unload the 2033s and 2037s, a New York-based trader said.

And Uruguay’s 2024s continued to outperform, he said.

Norilsk Nickel sells notes

Russia’s Norilsk Nickel, via MMC Finance Ltd., priced a $1 billion issue of notes due Oct. 14, 2022 with a coupon of 6 5/8%, a market source said.

The notes were talked in the 7% area.

Barclays, Citigroup, ING, Societe Generale CIB and UniCredit were the bookrunners for the Rule 144A and Regulation S deal.

Other details were not immediately available on Tuesday.

The nickel and palladium producer is based in Moscow.

Bancomext prices bonds

Mexico’s Bancomext sold $1 billion 4 3/8% notes due Oct. 14, 2025 at 99.719 to yield 4.41%, or Treasuries plus 237.5 bps, a market source said.

The notes were talked at a spread in the 250-bps area.

BofA Merrill Lynch and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general business purposes, including for asset and liability management purposes.

Bancomext is a state-owned bank based in Mexico City.

IDBI plans issuance

India’s IDBI Bank Ltd. is looking to issue dollar-denominated notes sometime between mid-November and January, a market source said.

The Regulation S bonds will be part of the company’s $5 billion note program.

IDBI Bank is a public sector bank based in Mumbai.

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