Shinsegae sells notes; Treasuries rally, dip; Sinopec tightens; investor call for Afreximbank

By Christine Van Dusen

Atlanta, May 5 – South Korea’s Shinsegae Co. Ltd. sold notes on a firm Tuesday morning for Asian bonds that saw more buyers than sellers as U.S. Treasury rates rallied, then moved lower.

High-grade cash names from Asia closed the session unchanged to 3 basis points tighter, a London-based trader said.

A wave of buying “drove spreads tighter, but post-London open, U.S. Treasuries rallied, and we had some profit-taking flow from fast money,” he said.

The new issue of 3½% notes due 2025 from Hong Kong’s Cnooc, which priced at 99.075 to yield Treasuries plus 160 bps, was spotted Tuesday at 154 bps before closing 4 bps tighter at 156 bps bid, 154 bps offered.

China Petrochemical & Chemical Corp.’s (Sinopec) new 3¼% notes due 2025 that priced at 99.022 to yield Treasuries plus 145 bps moved to 141 bps and then closed at 143 bps bid, 140 bps offered, or 4 bps tighter.

“The new Sinopec 30-year’s spreads were a couple tighter at 159 bps bid, 154 bps offered,” he said.

High-grade bonds from China narrowed on Tuesday morning by about 5 bps, with buyers seen for names like China’s Yuexiu Property Co. Ltd.

“Korea was quiet while India was a touch firmer as we traded good two-way in subordinated five-year bank paper,” he said.

For high-yield sovereigns the tone was strong on Tuesday morning, he said.

But as the session went on, Treasury rates moved lower, another trader said.

Indonesia active

Indonesia’s 2045s were active in the morning at 101¾, then moved to 101 5/8 bid, 101 7/8 offered, a trader said.

“Seeing some buy interest in the 2025s as well, from 101 3/8 to 101 5/8 left bid,” he said. “Philippines cash is quieter, with buyers of the 7¾% 2031s here. Price action in the short-end and belly is fairly mute.”

The focus, he said, was on longer-end and higher-yielding Philippines bonds.

Shinsegae prices notes

South Korea’s Shinsegae sold $300 million 2 5/8% notes due May 8, 2045 (//A) at 99.42 to yield Treasuries plus 125 bps, a market source said.

Citigroup was the bookrunner for the Regulation S deal.

Shinsegae is a Seoul-based department store franchise.

Afreximbank sets investor call

Egypt’s African Export-Import Bank (Afreximbank) will hold an investor update call on Friday, a market source said.

MUFG Securities is arranging the call.

Afreximbank is a Cairo-based international bank specializing in trade related financing for Africa.

Bladex in focus

Some investors were focused on Tuesday on the new issue of notes from Panama’s Banco Latinoamericano de Comercio Exterior (Bladex), an issue of 3¼% notes due in April 2020 that priced at 99.653 to yield Treasuries plus 190 bps.

BofA Merrill Lynch and Citigroup were the bookrunners for the Rule 144A and Regulation S deal.

“Initial price talk was 200 bps, while bonds were issued with a 190 bps spread,” according to a report from Schildershoven Finance BV. “We don’t see any value on this issue, as the bonds’ price is too high.”

Brazilian meat exports

In other news from Latin America, Brazilian meat producers will soon be permitted to export to the U.S.

The main beneficiaries of this change will likely be Brazil-based JBS SA, Minerva SA and Marfrig Alimentos SA, Schildershoven said in its report.

“Besides growth in export sales, the companies will increase chances for their Brazilian divisions to get access to Japanese and South Korean markets,” the report said. “That is positive news for all Brazilian beef producers. We confirm our hold recommendation on JBS bonds.”

Pacific Rubiales ticks higher

Toronto-based and Colombia-focused Pacific Rubiales Energy Corp.’s bonds climbed amid signals that investors from Venezuela could increase their stake in the company, a trader said.

“We’re seeing buyers of the 2019s and 2021s and sellers of the 2023s,” he said.

At this point, the group owns more than 10% of the company’s shares, Schildershoven said.

“According to the group, Pacific Rubiales has a long-term value,” the report said. “This is an additional factor that could positively influence the company’s bonds.”

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