Primary hosts China Aoyuan Property, ICBC, Hsin Chong; Treasuries weaken; oil rallies

By Christine Van Dusen

Atlanta, May 18 – China Aoyuan Property Group Ltd., Industrial and Commercial Bank of China Ltd. and China’s Hsin Chong Construction Group Ltd. sold notes on Monday as Treasuries weakened and oil continued to rally.

“We still wait for the supply in emerging Europe, the Middle East and Africa to pick up,” a London-based trader said. “Still hearing of EM funds getting inflows, although there is some reluctancy to step in with decent-size buying programs as they wait for a dip and new supply. The longer it takes, the more they underperform and the smaller the dip, if any, we actually get.”

This suggests that emerging markets bonds could move tighter, he said.

From Latin America, Brazil-based Petroleo Brasileiro SA was in the news on Monday after beating analysts’ estimates for first-quarter earnings, which sent the company’s bond curve tighter by about 15 basis points, another trader said.

Chile-based Cencosud SA saw the bid continue to strengthen on its curve, with buyers appearing sporadically throughout Monday’s session, he said. The 2021s, he said, were the toughest bonds to source.

Low-beta spreads from Latin America fared well, another trader said, and tightened slightly on Monday.

Cash prices held up well in the face of weakening Treasuries, and Brazil was an outperformer, he said.

Venezuela and PDVSA, however, drifted lower as buyers outnumbered sellers on the day.

In other trading on Monday, bonds from Indonesia were firmer, with decent buying that was eventually curbed by a slight back-up in Treasuries, a London-based trader said.

“The downtrend still looks to be in play, so a little cautious adding risk up here,” he said. “Philippines was quiet, with subdued interest for a change, but the tone was still firm.”

Looking to the Middle East, spreads managed to perform, with perpetuals catching a bid, another trader said.

Market sources were also whispering about a possible issue of up to $4 billion in notes from Kazakhstan.

ICBC prices notes

Industrial and Commercial Bank of China priced $500 million 2 5/8% notes due May 26, 2020 at 99.689 to yield 2.693%, or Treasuries plus 120 bps, a market source said.

Citigroup, Emirates NBD, ICBC International and National Bank of Abu Dhabi were the bookrunners for the Regulation S deal.

The issuer is based in Beijing.

Aoyuan Property sells bonds

China Aoyuan Property Group priced $250 million 10 7/8% notes due May 26, 2018 at 99.067, a market source said.

The notes were talked at 11¼% to 11 3/8%.

UBS, ABC International, Guotai Junan and BofA Merrill Lynch were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance indebtedness.

China Aoyuan is an investment holding company based in Guangzhou, China.

Hsin Chong taps notes

China’s Hsin Chong Construction Group priced a $50 million tap of its 8¾% notes due May 18, 2018 at 101.25, a market source said.

The notes were talked at a price in the 101 area.

The original 8¾% notes due 2018 priced at 99.355.

UBS was the bookrunner for the Regulation S notes.

Proceeds will be used for working capital and general corporate purposes.

The construction and property company is based in Hong Kong.

Beijing company sets talk

China-based Beijing State-Owned Assets Management Co. Ltd. set talk for a two-tranche issue of dollar-denominated notes due in five and 10 years, a market source said.

The five-year notes were talked at a spread of Treasuries plus 160 bps to 165 bps.

The 10-year notes were talked at a spread of Treasuries plus 205 bps to 210 bps.

Citigroup and UBS are the bookrunners for the Regulation S deal, which could price as soon as Monday.

The proceeds will be used to refinance certain indebtedness, for working capital and for general corporate purposes.

Guidance from Itau Unibanco

Brazil’s Itau Unibanco Holding SA set talk in the Treasuries plus low-200 bps area for a three-year issue of dollar-denominated and benchmark-sized notes, a market source said.

BB Securities, BofA Merrill Lynch, Citigroup, Itau BBA and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Itau Unibanco is a lender based in Sao Paulo.

Dubai Islamic sets roadshow

Dubai Islamic Bank PJSC will set out on Thursday for a roadshow to market a dollar-denominated issue of benchmark-sized Islamic bonds, a market source said.

Dubai Islamic Bank, First Gulf Bank, HSBC, Maybank, National Bank of Abu Dhabi and Standard Chartered Bank are the bookrunners for the Regulation S deal.

The roadshow will begin in Kuala Lumpur and travel to Singapore before concluding on May 26 in London.

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