Petrobras news, Petronas issuance put oil companies in the spotlight; ICBC oversubscribed

By Christine Van Dusen

Atlanta, March 13 – Brazil-based Petroleo Brasileiro SA (Petrobras) remained in the news on Friday as emerging markets investors focused their attention on the new four-tranche issue of $5 billion notes from Malaysia-based Petroliam Nasional Bhd. (Petronas).

Petrobras received attention on Friday after a media source reported that the oil company is looking to delay its audited results by six months to avoid having to pay off its debts, a trader said.

“The market is understandably skittish about this story, given that it is the middle of March and progress appears to have stalled,” he said. “But the company must be working towards a solution via all possible avenues.”

The company’s 2024s moved 32 basis points wider on Friday, while the 2043s moved out 24 bps, a New York-based trader said.

The 2021s were seen widening 45 bps while the 3¼% 2017s stretched a whopping 85 bps wider, he said.

Meanwhile, Malaysia-based oil company Petronas’ new issue of 4½% notes due in 2045 that priced this week at 98.767 to yield Treasuries plus 190 bps was spotted on Friday at 195 bps bid, 192 bps offered, another trader said.

The deal also included $1.25 billion 2.707% Islamic bonds that priced at par to yield 2.707%, or Treasuries plus 110 bps, after talk of a 135-bps spread.

The $750 million 3 1/8% notes due March 18, 2022 priced at 99.39 to yield Treasuries plus 130 bps, following talk of a 150-bps spread.

Petronas details

The Petronas deal also included $1.5 billion 3½% notes due March 18, 2025 that priced at 99.125 to yield Treasuries plus 150 bps, following talk of a 175 bps spread.

And the $1.5 billion 4½% notes due in March 18, 2045 priced at 98.767 to yield Treasuries plus 190 bps, following talk at 220 bps.

Those notes received less attention in trading on Friday, the trader said.

BofA Merrill Lynch, CIMB and Deutsche Bank were the bookrunners for Regulation S deal.

Many Asian bonds tighten

From Asia, bonds followed the overnight rebound in equities and finished Friday unchanged to 5 bps tighter, a London-based trader said.

Bonds from Hong Kong and China led the rally, he said, with spreads narrowing 3 bps to 5 bps.

China’s oil companies were tighter by as much as 7 bps, while banks were better bid and as much as 5 bps tighter.

Property companies from China were unchanged to ¼ point higher.

Sovereigns try to firm

Asian sovereigns “tried to firm up but failed as U.S. Treasuries leaked post-London open,” the trader said.

Bonds from Korea were largely unchanged, with demand in the short end, he said.

“India closed unchanged to 5 bps wider on mixed flows,” he said. “Philippines’ curve closed unchanged, but we are 2 bps to 5 bps tighter on spread. Indonesia’s curve is still trading heavy, with the long end ½ point lower. The belly outperformed and closed unchanged.”

ICBC attracts orders

Industrial and Commercial Bank of China Ltd.’s new $1 billion issue of notes due in 2018 and 2020 drew a final order book of about $10.3 billion, a market source said.

The $400 million 2 5/8% notes due March 19, 2018 that priced at 99.493 to yield Treasuries plus 175 bps attracted $4 billion in orders from 150 investors, with 92% from Asia and 45% from banks.

The $600 million 3¼% notes due March 17, 2020 that priced at 98.957 to yield Treasuries plus 190 bps brought in $6.3 billion of orders from 211 investors, with 88% from Asia and 47% from fund managers.

Citigroup, ICBC Asia, ICBC International, JPMorgan, Morgan Stanley and Standard Bank were the bookrunners for the Regulation S deal.

The proceeds will be used for the acquisition of assets.

“Bonds opened 10 bps inside reoffer and traded tighter,” he said.

The three-year notes closed 20 bps tighter while the five-years finished Friday’s Asian session 21 bps tighter, he said.

Socar deal downsized

The new issue of notes from State Oil Co. of the Azerbaijan Republic (Socar) – $750 million 6.95% notes due 2022 that priced at par to yield Treasuries plus 484.1 bps – was downsized due to concerns about the price of oil, a trader said.

The notes, which were initially expected to total $1 billion, were talked at a yield in the 7% area.

Deutsche Bank, Citigroup, ING and JPMorgan were the bookrunners for the Regulation S deal.

On Friday, the bonds were trading up, at about 100.85, he said.

© 2015 Prospect News.
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