Uruguay, Arab Petroleum do new deals; risky assets grind higher; roadshow ahead for Rizal

By Christine Van Dusen

Atlanta, Oct. 19 – Uruguay and Saudi Arabia’s Arab Petroleum Investments Corp. sold notes on Monday as emerging markets assets gained some support from China’s weaker but better than expected – and still fairly supportive – economic data, as well as from the weaker dollar and euro.

“Risky assets are grinding higher,” according to a report from Barclays Capital. “The so-called ‘liquidity gap’ is reshaping asset markets as the scarcity of safe, short-term assets and a general decline in fixed-income liquidity since the beginning of the financial crisis have transitioned risk that used to sit inside the financial system into the hands of regular investors.”

Investment grade bonds from Asia opened unchanged to slightly tighter, a London-based trader said.

“Some bonds got lifted” after China’s data release “in thin volume,” he said. “Korea and India cash were unchanged.”

Looking to Turkey, sovereign cash was very firm on Monday morning as the currency held on to gains, another trader said.

“Having a close look at the curve, the belly has really outperformed, which made sense, as we have a fairly flat curve during the sell-off but we have got a level where the belly now looks rich to the curve,” he said.

Turkish banks and corporates were trading strongly on Monday morning, he said.

“The Street is being lifted out of risk aggressively, leaving some difficult shorts behind, which is probably what has led to a bid in the belly of the sovereign curve,” he said. “The Street looks to flatten their shorts as they are lifted out of bank and corporate paper.”

Lat-Am in focus

Bonds from Latin America were strong with light flows on Monday, a New York-based trader said.

Brazilian notes remained within last week’s ranges, he said, as clients became slightly better buyers.

Banks from Colombia were well-bid while corporates from Mexico were quiet.

“Chile corporates remain the backbone of strength in the Latin American credit universe, with certain credits once again becoming difficult to source,” he said.

Overall, risky assets are going to need some sort of catalyst, such as a step-up in stimulus from the European Central Bank, to keep a rally going, another trader said.

Uruguay sells notes

Uruguay priced $1.205 billion 4 3/8% amortizing notes due Oct. 27, 2027 at 99.140 to yield 4.475%, or Treasuries plus 245 basis points, a market source said.

The notes were talked at a spread in the 265-bps area.

Citigroup, HSBC and Itau BBA were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general government purposes and for liability management.

The notes will amortize in three equal installments in October of 2025, 2026 and 2027.

“Keep in mind this is the new cash portion,” a syndicate source said. “It’s not the final size.”

Arab Petroleum prints sukuk

Saudi Arabia’s Arab Petroleum Investments priced a $500 million issue of 2.383% Islamic bonds due Oct. 28, 2020 at par to yield 2.383%, a market source said.

Goldman Sachs, Standard Chartered, Emirates NBD Capital, First Gulf Bank, NCB Capital and Noor Bank were the bookrunners for the Regulation S sukuk.

Croatian issuer gives guidance

Croatia’s Hrvatska Elektroprivreda dd set talk at 6 1/8% for a $500 million issue of seven-year notes, a market source said.

Banca IMI, Morgan Stanley and UniCredit are the bookrunners for the Rule 144A and Regulation S notes.

The issuer is the national power company, based in Zagreb, Croatia.

Rizal sets roadshow

Philippines’ Rizal Commercial Banking Corp. will set out on Wednesday for a roadshow to market a dollar-denominated issue of notes, a market source said.

BofA Merrill Lynch, HSBC and JPMorgan are the bookrunners for the Regulation S deal.

The roadshow will be held in Singapore and Hong Kong.

The bank is based in Makati City, Philippines.

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