Century Properties sets roadshow; Petrobras gets downgraded again; Russia credit widens

By Christine Van Dusen

Atlanta, Jan. 30 – Philippines-based Century Properties Group Inc. on Friday made plans for an upcoming roadshow while emerging markets investors coped with volatility and wider spreads.

“It has been nothing short of a remarkable January this year, as the month draws to a close,” a London-based analyst said. “Amidst all this volatility, primary issuance was relatively limited in January, which has certainly supported spreads.”

Russian credit default swaps spreads ended the week 57 basis points wider, primarily due to concerns about increased sanctions, while bank bonds moved 112 bps wider, he said. Corporates moved out 115 bps.

“The European Commission will prepare additional sanctions, potentially economic, to be discussed at the leader meeting on Feb. 12,” he said. “Obtaining agreement on any punitive measures is likely to be difficult in our view. The United States, however, could far more easily implement more drastic sanctions.”

Also impacting Russian bonds was Friday’s surprising news that the Central Bank cut rates by 15%.

Another issuer received significant attention on Friday. Brazil-based Petroleo Brasiliero SA was downgraded for the third time in the last several months, this time when Moody’s Investors Service cut the company’s unsecured debt to Baa3 from Baa2, a trader said.

This came as the company was being investigated for collusion and money-laundering and was pummeled for releasing long-awaited and unaudited third-quarter earnings that did not include a write-down of assets connected to the corruption scandal.

“We were told that the first step to avoid a second downgrade to junk status would be for [the company’s accounting firm] to provide revised, not audited, third-quarter financial statements with an estimation of the write-off within the next month,” the trader said.

Petrobras’ spreads widened in response, another trader said, with the 2% 2016s and 3 7/8% 2016s “hit in the Street,” he said.

Belarus restructuring ahead

From Belarus, bonds sold off on the news that the sovereign would have to restructure its debt, a trader said.

“It was later claimed by Minsk that the president had meant ‘refinance,’ and the bonds promptly rose 10 points, although we’re not sure there was too much actual trading in the market during these large moves,” he said.

Bonds from Central and emerging Europe were slightly wider, on rates, he said.

Middle East mixed

From the Middle East, investment-grade names performed well during the week, especially those from Abu Dhabi and Qatar, the analyst said.

“The market has been supported by a noticeable lack of supply, but with low rates, one would assume more is on its way,” he said.

Bank bonds from the Middle East were flat to end the week and perpetuals were mixed, with Dubai Islamic Bank PJSC and Abu Dhabi Islamic Bank perpetuals underperforming the most and Emirates NBD outperforming, a trader said.

“Corporates were 2 bps wider, on average,” he said.

Vakifbank ‘anticlimactic’

Looking to Turkey, credit default swaps spreads widened 8 bps by Friday as the market focused on Turkiye Vakiflar Bankasi TAO’s (Vakifbank) new 6 7/8% notes due Feb. 3, 2025 that priced Monday at 99.687 to yield 6.95%.

BofA Merrill Lynch and Standard Chartered Bank were the joint structuring advisers and joint lead managers. Citigroup, Deutsche Bank, Goldman Sachs and HSBC were the joint lead managers for the Rule 144A and Regulation S deal.

“In the end, it was all rather anticlimactic, with the bond pricing just 5 bps tighter than initial price talk,” a trader said. “Generally, it seemed investors felt there was some value, but there were concerns about the book size and trading in the deal, since issuance has been relatively limited.”

The notes moved down about a half-point from reoffer by the end of the week, he said.

Other Turkish banks also underperformed the sovereign’s bonds, he said, due to weaker sentiment.

“Corporates were 14 bps wider, on average,” he said.

Kaisa rallies

China-based Kaisa Group’s bonds rallied as much as 18 points higher on Friday on the news that Sunac China Holdings Ltd. had signed a pact to acquire a 49.3% stake in the troubled company, the analyst said.

Kaisa is under investigation for ties to an allegedly corrupt Shenzhen official.

“But there was profit-taking after lunch, to reduce the net gains for the day to be around 11 points up,” he said.

Sino-Ocean moves up

Bonds from Asia finished the week slightly firmer, with China-based Sino-Ocean Land Holdings Ltd.’s new 4.45% notes due in 2020 moving higher, a trader said.

The notes priced at 98.806 to yield 4.721%, or Treasuries plus 340 bps, following talk of a spread in the 370 bps area.

The deal also included 5.95% notes due in 2027 that priced at 99.737 to yield 6.1%, or Treasuries plus 429.6 bps, following talk in the 435 bps area.

HSBC, Goldman Sachs, JPMorgan and Morgan Stanley were the joint global coordinators for the Regulation S deal and bookrunners with Bank of China, BNP Paribas, Deutsche Bank, DBS and Wing Lung Bank.

Asian sovereigns in focus

High-yield sovereign curves from Asia were lower by a ¼-point on Friday, a trader said.

Indonesia’s 2045 bond closed at 106 bid, 106.375 offered. The 5 1/8% notes due in 30 years priced at 98.867 to yield 5.2%, following talk in the 5¼% area, via Citigroup, HSBC and Standard Chartered Bank.

Philippines’ 2040 closed in Asia at 109.875 bid, 110.125 offered. The notes priced at par to yield 3.95%, or Treasuries plus 142.3 bps, after talk in the 4% area.

Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Standard Chartered Bank and UBS were the bookrunners for the Securities and Exchange Commission-registered deal.

And bonds from India tightened by Friday, he said.

Philippines-based Century Properties will set out on Feb. 2 for a roadshow to market a dollar-denominated issue of notes, a market source said.

HSBC, Standard Chartered Bank and UBS are the bookrunners for the deal.

The real estate company is based in Makati City, Philippines.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.