Ukraine still tense; Chinese corporates improve; MAXpower, Century Properties cancel deals

By Christine Van Dusen

Atlanta, Feb. 9 – Middle Eastern bonds were mixed, Latin American bond activity was quiet, and investors remained nervous about the situation in Ukraine on Monday, following Friday’s meeting between the leaders of France, Germany and Russia.

“Unfortunately, negotiations produced no immediate breakthrough in the conflict,” according to a report from Schildershoven Finance BV. “The leaders only said that the talks were constructive and agreed to meet in Belarus in an expanded format, including Ukrainian President Petro Poroshenko, on Wednesday to try to broker a peace deal.”

Tougher sanctions on Russia are unlikely to be instituted before the next summit of European Union leaders, which is set for March, the report said.

“We believe the markets will remain nervous till the meeting on Wednesday, as the situation still unclear,” the report said.

In trading from the Middle East on Monday, two-way activity was seen for DP World and some other Dubai names, a London-based trader said.

Supply remained limited for Dubai Islamic Bank PJSC’s perpetuals and for National Bank of Abu Dhabi’s 2020s, he said.

“Some high-yield names are without much support at the moment,” he said. “Flow was very even, all told. Small adding on perpetuals seen and selling on Qatari names.”

Asian bonds put in another firm session on Monday, following Friday’s sell-off in U.S. Treasuries, which gave credits “room for spreads to compress,” a trader said.

“High-grade cash roughly closed 2 basis points to 5 bps tighter, with 10-year bonds leading the rally,” he said.

Meanwhile, market sources were whispering about a possible issue of international bonds this year from Armenia and a roadshow for a Singapore dollar-denominated issue of notes from Indonesia’s PT Duta Anggada Realty Tbk.

Asian bonds firm

Corporates from China managed to improve, despite recent disappointing economic data, a trader said.

And Chinese high-yield property companies saw their notes close 1/8 point to ¾ point lower.

China-based Shimao Property Holdings Ltd.’s new seven-year notes that priced at par to yield 8 3/8% traded down at 99½ before closing at 99 3/8 bid, 99 7/8 offered, he said.

Tencent tranches tighten

The new issue of notes from China-based Tencent Holdings Ltd. – 2 7/8% five-year notes that priced at 99.797 and 3.8% 10-year notes that priced at 99.605 – traded up but saw profit-taking, the trader said.

The five-year notes were 5 bps tighter, while the 10-years were seen tightening by 3 bps.

“China oil corporates were 1 bp to 3 bps tighter,” he said.

Asian sovereigns in focus

In other trading from Asia, bonds from India remained well-bid after the government injected capital into nine banks, a trader said.

“Malaysia is a couple basis points tighter and had sellers into strength,” he said. “High-yield sovereigns took a hit, with the Philippines long end ¾ point to 1 point lower and the belly ¼ point lower.”

Meanwhile, Indonesia’s 2025s traded up at 102 while its 2024s traded up at 115 7/8, he said.

Postponed deals

Indonesia-based gas-to-power specialist and plant operator MAXpower Group Pte. Ltd. has postponed plans for a $250 million issue of five-year notes, a market source said.

The notes were talked at a yield in the 11¾% area and were to be non-callable for three years.

And Philippines-based real estate company Century Properties Group Inc. has canceled plans for a dollar-denominated issue of five-year notes, a market source said.

The notes had been talked at a yield of 9½%.

HSBC, Standard Chartered Bank and UBS were the bookrunners for the Regulation S deal and the proceeds were to be used for general corporate purposes.

Cencosud attracts orders

The final book for Chile-based retail company Cencosud SA’s two-tranche issue of $1 billion notes due 2025 and 2045 was more than $3 billion, a market source said.

The $650 million 5.15% notes due in 2025 that priced at 99.637 saw 49% of its orders come from the United States, 38% from Europe, 8% from Latin America, 4% from Canada and 1% from Asia.

The $350 million 6 5/8% notes due in 2045 priced at 99.909 drew 50% of its orders from the United States, 34% from Europe, 13% from Latin America and 3% from Asia and Canada.

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

In trading on Monday, Cencosud’s curve widened with little volume going through on the new issues, a New York-based trader said.

The deal experienced a “lack of Street support,” he said.

Halkbank releases final book

Turkey-based lender Turkiye Halk Bankasi (Halkbank) attracted about $1.8 billion of orders for its new $500 million issue of 4¾% notes due 2021 that priced at 99.562 to yield 4.835%, or mid-swaps plus 322 bps, a market source said.

The notes were talked at a spread in the 340 bps area.

About 31% of the orders came from Europe, 29% from the Middle East, 22% from the United Kingdom and 18% from the United States.

Fund managers picked up 59%, banks and private banks 36% and others 5%.

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

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