Rally in rates keeps Asian bonds firm; new issues in focus; Swiss franc notes from BCI

By Christine Van Dusen

Atlanta, May 13 – Core rates rallied somewhat on Wednesday morning, keeping Asian bonds firm, with high-grade notes closing unchanged to 2 basis points tighter amid healthy client demand and particular interest in long-dated paper.

“The rates move today was a little more subdued than in recent days, with the 10-year moving in ‘just’ a 7-bps range,” a London-based trader said.

Most of the focus was on new issues, including China-based Huawei Technologies Co. Ltd.’s 4 1/8% notes due 2025 that priced at 99.060 to yield Treasuries plus 195 bps.

The notes started Wednesday morning at 178 bps, then traded near 180 bps before closing the Asian session at 180 bps bid, 178 bps offered.

ANZ, Bank of China (Hong Kong), DBS Bank, ING and Standard Chartered Bank were the bookrunners for the Regulation S deal.

China General Nuclear Power Corp.’s new 4¼% notes due 2025 that priced at a spread of 177.5 bps tightened to 173 bps, then widened to 176 bps before closing at 176 bps bid, 173 bps offered.

“Good Asian retail demand,” a London-based trader said.

China Petroleum & Chemical Corp. (Sinopec Group) saw its 2½% notes due 2020 – which priced at 99.576 to yield Treasuries plus 125 bps – trade at 112 bps.

And Cnooc Ltd.’s 2 5/8% notes due 2020 that priced at 99.716 to yield Treasuries plus 128 bps moved to 122 bps.

“Financials were broadly unchanged,” he said. “Korea was a touch firmer.”

Among high-yield Asian bonds, property company notes were broadly unchanged, he said.

Agile, Indonesia see activity

China-based Agile Property Holdings Ltd.’s new 9% notes due 2020 that came to the market on Tuesday at 99.507 to yield 9 1/8% traded between 99 3/8 and 99¾, then moved to 99.80 before closing at 99¾ bid, par offered.

Among sovereigns, long-end bonds from Indonesia were up 5/8-point after trading at a high of par, then moved to 99½ bid, 99 7/8 offered, another trader said.

“The 2025s are performing well at 100 3/8 bid, 100 5/8 offered,” he said. “The 2024s are heavy, and traded at 113 today, up a ¼ point only, and look like value. But demand for higher-cash priced bonds waning. Dealers in Asia clearly are just using this minor bounce to sell bonds.”

Philippines firms up

Bonds from the Philippines were slightly firmer, with the curve flattening, driven by strength in the long end, a trader said.

“The 2040s spent all day up 1 1/8 at 103½ bid, 103¾ offered,” he said. “Some buying of 2025s earlier, but in general customers are favoring the lower-cash prices and more recent issues.”

Tuesday’s orderly flow “makes me think we may see some risk-on in London open,” another London-based trader said. “Still light on the primary supply in Central and emerging Europe, the Middle East and Africa.”

DP World trades well

Looking to the Middle East, the new issue of notes from Dubai-based DP World traded well on Wednesday, a London-based trader said.

The 3¼% notes due 2020 priced at 99.835 to yield mid-swaps plus 155 bps via Barclays, Citigroup, Deutsche Bank, Emirates NBD Capital, HSBC, National Bank of Abu Dhabi and Societe Generale CIB in a Rule 144A and Regulation S deal.

“They returned to the markets with a somewhat smaller, and perhaps shorter-dated, bond than the market was expecting when the mandate was initially announced,” he said. “A few usual profit-takers and short-term investment professionals around early who are now long gone.”

The notes were seen late in the London session at about 114½.

Middle East in focus

Bahrain’s 2044 moved back to a 97 handle while buyers emerged for Kuwait Energy plc, a trader said.

“We are slightly wider on the rates rally, and obviously we tighten nicely in this market on the rates sell-offs,” he said.

High-yield names from the region were well-supported, he said.

“Balanced flow, overall,” he said.

Pacific Rubiales ‘subdued’

From Latin America, Toronto-based and Colombia-focused Pacific Rubiales Energy Corp. remained in focus after a Spanish billionaire joined a group of Venezuelan investors that oppose the size of the takeover bid from Mexico-based Alfa SAB and Harbour Energy Ltd.

“Street action continues to be subdued,” a trader said. “Liquidity can be very spotty at times, but that’s not surprising, given the situation at hand.”

Lat-Am mixed

Debt from Latin America ended the day mixed, though generally better, a trader said, even as Treasury rates remained volatile.

Bonds from Argentina finished Wednesday up 25 cents to 50 cents amid lighter flows and better selling from some real-money accounts.

“Hard to get accounts engaged in this uncertain backdrop,” he said.

BCI prints notes

In a small deal from Wednesday’s session, Chile’s Banco de Credito e Inversiones (BCI) priced CHF 150 million ¼% notes due June 17, 2020 at 100.485 to yield 0.153%, or mid-swaps plus 40 bps, a market source said.

UBS was the bookrunner for the deal.

The lender is based in Santiago.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.