Dubai bank issues notes; ‘tricky’ morning gives way to some rallying; Tanner puts off deal

By Christine Van Dusen

Atlanta, Nov. 10 – Commercial Bank of Dubai PJSC sold notes on “tricky” Tuesday morning that later saw Latin American assets rally ahead of Wednesday’s Veterans Day holiday in the United States.

“Another tricky start,” a trader said. “Poor technicals explain the weakness in [Gulf region] perpetuals, with bids few and far between.”

Bonds from Egypt have moved about 55 basis points wider during the past week, in the wake of the plane crash in Sharm el-Sheikh that killed all 224 people on board.

Other sovereigns from Africa were “defensive” on Tuesday, moving between 10 bps and 20 bps wider, he said.

From Latin America, sovereign spreads on Tuesday finished the day tighter, a New York-based trader said.

“The market finally gets some relief from the recent bout of selling,” he said.

Brazil’s five-year credit default swaps spreads ended Tuesday at 410 bps from 423 bps, and Mexico’s moved to 150 bps from 153 bps.

“Cash prices see some stability, as it looks like we may be trying to consolidate in a new range of higher yields and lower dollar levels,” he said.

High-yielders from Latin America also rallied on Tuesday, with Venezuela’s 2027s closing at 43½ from 42¾ and PDVSA’s 2017s ending at 60¾ from 60½.

“Early morning we saw better sellers of EM low-beta credit but buyers emerged in the afternoon,” he said.

Market sources were also whispering about possible notes in 2016 from Saudi Arabia, a rupee-denominated deal from India Infrastructure Finance Co. Ltd. and a $200 million to $500 million issue of bonds from Argentina’s Banco Hipotecario SA.

Turkey, Pakistan in focus

Looking to Turkey, “we are pretty much in no-man’s land, in terms of spreads,” a trader said. “If clients are looking to add risk, I think the 10-year part of the curve looks like an OK value now, coming off the recent tights, versus the long end.”

And the Pakistan bond curve was weaker again, another trader said.

“The Street seems long of risk and trying to get rid of risk ad the market tone in high-beta softens,” he said.

Said another trader, “It feels like we are going to consolidate after the recent pull-back. All eyes back on Chinese data, as most of the market seems convinced of a December rate hike. If we get the China devaluation story rearing its head again, high-beta risk could weaken.”

CBD prices notes

In its new deal, Commercial Bank of Dubai sold $400 million 4% notes due Nov. 17, 2020 at par to yield 4%, or mid-swaps plus 232 bps, a market source said.

The notes were initially talked at a spread in the low-to-mid 200-bps area.

Citigroup, ING, JPMorgan and National Bank of Abu Dhabi were the bookrunners for the Regulation S deal.

Tanner postpones issue

Chile’s Tanner Finanzas Corporativas has postponed a planned issue of $300 million notes due in five years, a market source said.

The notes were talked the 5½% area.

BofA Merrill Lynch and JPMorgan were leading the Rule 144A and Regulation S deal.

The proceeds were to be used for general corporate purposes.

Tanner is a financial services company based in Santiago.

Argentine Bank to issue bonds

Argentina’s BBVA Banco Frances SA has received board approval to issue up to ARS 500 million of notes in one or more series, according to a 6-K filing with the Securities and Exchange Commission.

The notes would be issued under the company’s $750 million global note program.

The bank is based in Buenos Aires.

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