Primary hosts Cencosud, Pemex; Petrobras scandal continues; Lebanon picks banks

By Christine Van Dusen

Atlanta, Feb. 4 – Chile’s Cencosud SA and Mexico’s Petroleos Mexicanos sold notes on Thursday as better buyers were seen for paper from Latin America, with Brazil-based Petroleo Brasiliero SA (Petrobras) tightening even as investors remained focused on the continuing corruption scandal.

This time, police were questioning the treasurer of the Workers’ Party about donations requested from Petrobras. In response, the curve for Brazil-based Vale SA tightened too, with the 2042s outperforming, a New York-based trader said.

In other trading from Latin America, banks from Colombia moved higher and tighter while other corporates were mostly quiet, he said.

And the market reacted favorably to earnings results from Mexico-based Cemex SAB de CV, he said. The company’s curve climbed a few points after recent pressure.

Also on Thursday, the new issue of notes from Turkey-based Turkiye Halk Bankasi (Halkbank) – 4¾% 2021s that priced at 99.562 to yield 4.825%, or mid-swaps plus 322 basis points – was seen as offering upside value, a trader said.

But the notes struggled in trading as the session went on.

“Take a respectable bank, show up with a new issue, price it somewhat indifferently with minimal value, ignore all the technicals and just consider screen prices, throw in six banks to the syndicate, leave them to bicker and fight, bring your deal, allocate it poorly and watch it tank as the flippers hit bids.”

BofA Merrill Lynch, Commerzbank, Deutsche Bank, Erste Group, ING and Natixis are the bookrunners for the Rule 144A and Regulation S deal.

Despite the Halkbank deal, European asset managers have been added bonds from Turkish banks, another trader said.

Lira weakens

In other news from Turkey, the lira weakened significantly on Wednesday after the president strongly criticized the Central Bank for not cutting interest rates further, another trader said.

That led credit default swaps spreads to open Thursday slightly wider, he said.

“Although we are seeing a few buyers coming in,” he said.

Bank Asya faces challenges

Bonds from Turkey’s Asya Katilim Bankasi AS (Bank Asya) have undulated since regulators seized a majority stake, a trader said.

The 2023 bonds that priced in the $40s traded as high as the $70s, he said, “with investors believing that the chances of bankruptcy had fallen significantly,” he said.

“The bank still faces an extremely difficult financial situation and will need to grow its deposit base once again,” he said. “The regulator’s statement suggests the ownership could be temporary.”

And, he said, the bank’s assets could eventually be seized, “so there are still very real risks,” he said.

Geopark bonds fall

From Latin America, the 2020 bonds from Argentina-based oil and gas exploration company Geopark fell 14% on a report that the company had halted exploration in Southern Chile, according to a report from Schildershoven Finance BV.

“This region represents over 25% of the company’s oil and gas production, but costs in its fields are higher than in Colombia or Brazil,” the report said. “So it may be a part of the company’s strategy to reduce costs, in terms of low oil prices. It looks like investors overestimated the negative effect of the company management’s decision. However, the current situation in the oil market makes investments in the company’s bonds very risky.”

Mixed day for Asian notes

Bonds from Asia were mixed on Thursday, with high-grade cash bonds closing unchanged to a couple of bps wider, a trader said.

“Lower oil put pressure on China oil corporates, with the sector 1 bp to 3 bps wider,” he said.

Guangzhou, Kaisa make moves

High-yield property companies from China closed Thursday’s Asian session unchanged to a ¼-point lower, a trader said.

The downgrade of Guangzhou R&F Properties Co. Ltd. knocked bonds lower by about 2 points.

On the news that China-based Sunac China Holdings Ltd.’s chairman was buying a 49.25% stake in Kaisa Group Holdings Ltd., Kaisa’s bonds moved another 3 points higher, he said.

India in focus

Export-Import Bank of India’s new 2¾% notes due 2020 that priced at 99.404 to yield Treasuries plus 155 bps traded near reoffer on Thursday, a trader said.

“Had fast-money flippers,” he said.

The notes closed at 157 bps bid, 155 bps offered.

Barclays, Citigroup and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Spreads for other bonds from India were mostly firm and closed unchanged, he said.

“But bids were not as aggressive compared to earlier this week,” he said.

And long-dated bonds from the Philippines were down a ¼-point while the long end for Indonesia was unchanged to a quarter-point higher, he said.

Russia widens

From Russia, credit default swaps spreads opened 6 bps wider on Thursday, following oil-driven weakness earlier in the week, a trader said.

This came as several corporates and banks received downgrades.

“Oil has fallen further overnight, following the release of U.S. crude stocks data, which increased,” he said.

NBAD trades up

The new issue of notes from National Bank of Abu Dhabi PJSC – 2¼% notes due 2020 that priced Wednesday at 99.61 to yield mid-swaps plus 85 bps – was trading up a ½-point on Thursday morning, a trader said.

Citigroup, HSBC and Standard Chartered were the bookrunners for the Regulation S deal.

Overall, Middle Eastern names widened about 5 bps on Thursday, on the move in rates.

Cencosud sells bonds

In its new deal, Santiago-based retail company Cencosud priced a two-tranche issue of $1 billion notes due Feb. 12, 2025 and 2045, a market source said.

The $650 million 5.15% notes due in 2025 priced at 99.637 to yield Treasuries plus 337.5 bps after talk in the mid-300 bps area.

The $350 million 6 5/8% notes due in 2045 priced at 99.909 to yield Treasuries plus 420 bps after talk of a spread in the low-400 bps area.

HSBC and Scotiabank were the bookrunners for the Rule 144A and Regulation S deal.

Issuance from Pemex

Mexico City-based petrochemical company Pemex priced Ps. 25.3 billion 7.47% notes due Nov. 12, 2026 at 99.749234 to yield 7½%, or Bonos plus 190 bps, a syndicate source said.

BBVA, BofA Merrill Lynch, Citigroup, HSBC, Morgan Stanley and Scotiabank were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Century Properties sets talk

Philippines-based Century Properties Group Inc. set talk at 9½% for its upcoming issue of dollar-denominated notes due in five years, 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.

Lebanon mandates bookrunners

Lebanon has hired Blom Bank, Citigroup and Societe Generale de Banque au Liban to lead a notes offering of a minimum of $1 billion, a market source said.

No other details were immediately available on Thursday.

Issuance from Intercorp

On Wednesday, Intercorp Peru Ltd. sold $250 million 5 7/8% notes due Feb. 12, 2025 at 99.441 to yield 5.95%, a market source said.

The notes were talked at a yield in the 6¼% area.

Citigroup and Credit Suisse were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used primarily to refinance debt.

Intercorp is a Lima, Peru-based financial services company.

Tencent draws orders

The new $2 billion issue of notes due in 2017 and 2025 from China-based Tencent Holdings Ltd. drew a final order book of about $17 billion, a market source said.

The company priced $1.1 billion 2 7/8% five-year notes at 99.797 to yield 2.919%, or Treasuries plus 162.5 bps.

The $900 million 3.8% 10-year notes priced at 99.605 to yield 3.848%, or Treasuries plus 205 bps.

Deutsche Bank, Barclays, Goldman Sachs, JPMorgan, ANZ, Bank of China (Hong Kong), BofA Merrill Lynch, China Merchants Securities (HK), Citigroup and Credit Suisse are the managers for the Rule 144A and Regulation S offering.

“Both deals performed, with the five-year trading to tights of 159 bps and leaking wider as a flipper emerged,” a trader said. “It last traded up at 164 bps to close at 166 bps bid, 163 bps offered.”

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