Morning Commentary: Deal from Sinopec Group sees action; profit-taking seen among other new issues

By Christine Van Dusen

Atlanta, April 22 – The new five-tranche issue of dollar- and euro-denominated notes that China Petrochemical & Chemical Corp. (Sinopec Group) priced on Tuesday was active in trading on Wednesday morning.

“All tranches opened at reoffer, but fast money quickly shorted the five- and 10-year tranches,” a trader said.

The deal included $2.5 billion 2½% notes due 2020 priced at 99.576 to yield Treasuries plus 125 basis points after talk in the 145 bps area. Those notes opened the Asian session on Wednesday at Treasuries plus 125 bps, a trader said.

Later in the day the notes moved to 125 bps bid, 123 bps offered.

The 3¼% notes due 2025 that priced at 99.022 to yield Treasuries plus 145 bps, after talk in the 160 bps area, moved to 146 bps on Wednesday morning.

The 4.1% notes due in 30 years that priced at par to yield Treasuries plus 152 bps, following talk in the 180 bps area, traded at 152 bps, he said. Later in the day the notes were seen at 154 bps bid, 151 bps offered.

Later on Wednesday, the notes were spotted at 152 bps bid, 150 bps offered.

The deal also included 0.5% notes due 2018 that priced at 99.716 to yield 0.596%, or mid-swaps plus 50 bps, following talk of 50 bps to 55 bps, and 1% notes due 2022 that priced at 99.243 to yield 1.113%, or mid-swaps plus 80 bps, matching talk.

“The market quickly bounced back, with real-money buyers out of Asia, and we rallied to tights,” the trader said.

Asia in focus

In other trading from Asia, most credits closed the session a little bit wider amid profit-taking on recent issues, a London-based trader said.

“New issues were mixed, with some profit-taking,” he said.

The new 2025 notes from Taiwan’s Formosa Plastics Group, which priced at a spread of 157 bps over Treasuries, moved to 158 bps and closed the Asian session at 160 bps.

Bank of China, HSBC, ANZ and Mizuho Securities were the bookrunners for the Regulation S deal.

“Malaysia’s 10-year and 30-year sukuk outperformed today,” the trader said, noting that the 10-years were 4 bps tighter and the 30-years 6 bps tighter.

“In the high-yield space, China property closed unchanged to ¼-point lower,” he said. “High-yield sovereigns were higher, with Philippines’ long end up ¼-point, 1 bp to 3 bps tighter on spread, while Indonesia’s long end outperformed, up ½-point to ¾-point on light flow.”

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