Turkish bank, Saudi Arabia ponder issuance; Gildemeister, Pacific Rubiales get attention

By Christine Van Dusen

Atlanta, April 2 – Turkey’s Turkiye Sinai Kalkinma Bankasi AS and Saudi Arabia considered future issuance on a slow Thursday for emerging markets assets against the backdrop of a decline in weekly initial jobless claims from the United States.

“The latest economic data suggests not being overly pessimistic on U.S. growth in 2015,” a London-based analyst said.

Asian credits remained firm, with high-grade cash bonds closing unchanged on the day, a London-based trader said.

“Flow was slower ahead of Easter holidays, but we had good two-way flow, with accounts looking to profit-taking after the U.S. Treasury rally,” he said.

Bonds from China-based Cnooc were particularly active, and Alibaba Group Holding Ltd.’s 2024s were well-offered, he said.

“Korea was quiet and unchanged while India’s short end remained well-bid,” he said. “High-yield sovereigns failed to keep up with the U.S. Treasury rally, with both the Philippines and Indonesia curves opening ½ point higher and retreating to close unchanged to ¼ point higher.”

Indonesia’s 5 1/8% notes 2045 that priced at 98.867 closed the Asian session at 105½ bid, 105¾ offered, he said.

From Latin America, Brazil’s Oi SA was in the news after cutting more than 1,000 jobs as part of a plan to reduce costs and improve profitability and productivity.

“In terms of Brazil’s economic decline and [currency] depreciation, it is a positive move from the company’s management,” according to a report from Schildershoven Finance BV. “Investors should be cautious about the company, as the economic situation in the region may become worse.”

Gildemeister looks to default

Investors were also watching Chile’s Automotores Gildemeister SA, which is expected to default, given the decline in the currency and the economic downturn.

That sent the company’s bonds down 7%, Schidershoven said.

“The company’s default will be a negative factor for Chile’s bond market,” the report said. “At the same time, this region continues to be one of the most stable in Latin America.”

Still, the report said, “investors should strongly avoid the company’s bonds and may continue searching for hold ideas.”

Pacific Rubiales in focus

Brazil’s Pacific Rubiales Energy Corp. saw more selling than buying of its bonds on Thursday, a trader said.

“But oil is bouncing back,” he said.

This followed the news that Standard & Poor’s knocked Pacific Rubiales down to BB/negative from BB+/watch negative and that the company could soon meet with investors.

On Thursday, Pacific Rubiales’ 5 3/8% notes due in 2019 traded at 65½ bid, 66 offered after Wednesday’s 66 bid, 67 offered and Tuesday’s levels of 66 bid, 67¼ offered.

The 7¼% notes due in 2021 were spotted Thursday at 65½ bid, 66¼ offered after Wednesday’s 66 bid, 67 offered and Tuesday’s 67¼ bid, 68¾ offered.

The 5 1/8% 2023s were seen Thursday at 56½ bid, 57¼ offered after trading Wednesday at 56¼ bid, 57¼ offered and Tuesday at 57½ bid, 59 offered.

And the 5 5/8% 2025s traded Thursday at 57½ bid, 58½ offered after Wednesday’s 58 bid, 59 offered and Tuesday’ 58½ bid, 59½ offered.

Pacific Rubiales also recently reported disappointing earnings, suspended dividends and saw its bonds plummet after a contract change with Ecopetrol SA meant other operators would likely run Rubiales Field.

Lender, Saudi Arabia deals

In deal-related news, Turkey’s Turkiye Sinai Kalkinma Bankasi is looking to issue up to $750 million in notes, a market source said.

The issuer is a subsidiary of Istanbul-based Turkiye Is Bankasi AS (Isbank).

And Saudi Arabia is looking to issue bonds sometime this year, a market source said.

This would be the sovereign’s first issue since 2007.

Other details were not immediately available on Thursday.

© 2015 Prospect News.
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