Indonesia sells notes; Asian notes widen; Chile performs; Capital Juda, Minmetals trade

By Christine Van Dusen

Atlanta, July 24 – Indonesia sold notes on a Friday that saw limited liquidity and muted activity for emerging markets assets as commodities remained under pressure and the summertime doldrums set in.

In trading, Asian credits ended the week with a softer tone, with investment-grade cash bonds moving 2 basis points to 5 bps wider, a London-based trader said.

The new issues from the region underperformed as pressure on commodities “dampened the mood,” he said.

“Malaysia is 3 bps to 5 bps wider,” he said. “Korea is 1 bp to 2 bps wider. India managed to hold in unchanged.”

Asian property-company bonds were outperformers, due to policy support and strong mid-year financial results, another trader said.

“Cement, oil and coal continue to be haunted by diminishing growth,” he said. “Don’t expect much momentum going into the end of the summer.”

From Latin America, corporate bonds from Chile performed, although Codelco moved wider, a New York-based trader said.

The company’s notes are 45 bps wider on the week, he said, “prompted in part by continuing commodity pressures and heated worker protests in their El Salvador mines, which represent their smallest production.”

Two-way flows were reported for some Latin America sovereign names, another trader said, but activity was quiet overall.

“Buyers of Mexico’s short end, sellers of the Brazil belly,” he said. “[Petroleos Mexicanos SAB de CV] is still for sale.”

Looking to Ukraine, sovereign bonds entered the end of the week higher by about ½ point, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

This was driven by the news that the sovereign’s finance ministry repaid another coupon on about $2.6 billion of five-year bonds.

“Additionally, an IMF comment that ‘further progress is expected by July 31’ was taken positively,” he said. “In the quasi-sovereign space, better bids were seen for Oschadbank.”

Indonesia prints notes

On Friday, Indonesia priced a €1.5 billion issue of 3 3/8% notes due 2025 at 98.507 to yield 3.555%, or Treasuries plus 250 bps, according to a filing and a market source.

Deutsche Bank, Societe Generale CIB, Standard Chartered Bank, PT Bahana Sekuritas, PT Danareska Sekuritas and PT Mandiri Sekuritas were the bookrunners for the Rule 144A and Regulation S deal.

The deal drew a final order book of €2.4 billion from 1335 accounts, with 37% to the United States, 13% to Asia (ex-Indonesia), 7% to Indonesia, 17% to the United Kingdom, 9% to Germany and Austria, 8% to Scandinavia and Switzerland and 9% to the rest of Europe, according to a press release.

About 66% went to asset managers and fund managers, 16% to banks and private banks, 9% to insurance and pension funds and 9% to central banks and sovereign funds.

Capital Juda attracts orders

The new issue of notes that Beijing Capital Juda Ltd. priced on Thursday – RMB 1.3 billion of 5¼% guaranteed notes due 2018 that came to the market at par – traded at 100.10 bid, 100.20 offered on Friday, a market source said.

HSBC, DBS Bank, ABC International, Bank of China (Hong Kong) and China Construction Bank were the underwriters for the Regulation S notes.

All of the 78 orders came from Asia, with banks buying 49%, fund managers 42% and private banks 9% of the RMB 2.8 billion order book.

Minmetals notes widen

China Minmetals Corp.’s new $1 billion two-tranche issue of notes due July 30, 2020 and 2025 saw some demand, a market source said.

The $500 million 3½% five-year notes priced at 99.501 to yield 3.61%, or Treasuries plus 195 bps. The notes were talked at a spread in the 215-bps area.

On Friday the notes were spotted at 200 bps in the secondary market.

The $500 million 4¾% notes due 2025 priced at 99.858 to yield 4.768%, or Treasuries plus 245 bps, following talk in the 265-bps area.

The 2025 notes traded wider on Friday, near 252 bps, he said.

The five-year notes attracted about $1.1 billion in orders from more than 70 accounts, while the 10-year took in about $1.5 billion from more than 90 accounts.

Deutsche Bank, HSBC, JPMorgan, ICBC and Citigroup were the bookrunners for the Regulation S deal.

The proceeds will be used for general corporate purposes and for refinancing of indebtedness.

© 2015 Prospect News.
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