Primary sees Chile, Shanghai Electric, Reliance; limited depth for EM; roadshows ahead

By Christine Van Dusen

Atlanta, May 19 – Chile, Shanghai Electric Group Co. Ltd., India’s Reliance Industries and Singapore’s Starhill Global Real Estate Investment Trust were among the issuers to print notes on a firm but “trickier” Tuesday for emerging markets assets.

“Firm morning, and then a trickier afternoon as rates moved, post-the strong housing starts data,” a trader said. “We touched 2.3% on the Treasuries again before coming back to 2.24% at the London close.”

Still, Middle Eastern bonds saw tighter spreads on Tuesday amid a trickle of supply, with Bank of Sharjah PJSC among the few issuers from the region to advance deals.

“Flows are balanced, but again, there are plenty of sticky bonds and still not much depth to the market at certain times on certain bonds,” he said. “I guess that’s the nature of the beast these days. But I fear for depth in the summer and Ramadan.”

Some risk-averse investors, seeking to take out some profits, looked to sell two- and three-year paper from the Gulf region’s banks on Tuesday, he said.

Looking to Central and emerging Europe, investors were focusing on the upcoming election in Turkey, which is expected to a be a catalyst for some selling, another trader said.

“Price action remains choppy,” he said. “Soft start, given material Treasury weakness overnight and what appeared to be a continuation in curve steepening after a very small a brief respite. But the market really stabilized well over the course of the morning, especially in the front end and the belly of the curve.”

Meanwhile, Philippines’ bonds were among those that held in well on Tuesday, tightening about 1/8 point in the belly and ¼ point to ½ point on the long end, he said.

“Decent performance from the outset, so we’re not seeing the same rush on bonds here as we are on Indonesia,” he said.

Said another trader: “Korean sovereign cash turned over in good size, with local accounts involved. Other sovereigns were soft at the outset due to Treasury weakness but ripped higher during the afternoon session to recover much of the losses.”

China, India see buyers

Buyers were seen for short-dated bonds across China and India, with some selling of banks from Korea, another trader said.

China-based Huawei Technologies Co. Ltd.’s new 4 1/8% notes due 2025 that priced at 99.060 to yield 4.248%, or Treasuries plus 195 basis points, moved on Tuesday to 179 bps before closing at 179 bps bid, 177 bps offered, he said.

“I expect some buyers to return to this in the high-170s, but in general there was a very firm tone across the board,” he said.

Lat-Am in focus

Spreads for low-beta names from Latin America ended Tuesday’s session slightly wider after tightening earlier in the day, a New York-based trader said.

Most prices were firm for the day but weakened as Treasury weakness took its toll, he said.

Bonds from Venezuela and PDVSA continued to move lower while Argentina remained firm, with prices seen at or close to Monday’s close.

Flows were two-way, then veered into better selling at day’s end, he said.

Chile prices two tranches

In its new deal, Chile priced a €1.39 billion two-tranche issue of notes due in 10 and 15 years, a market source said.

The €440 million tap of the sovereign’s existing 1 5/8% notes due Jan. 30, 2025 priced to yield mid-swaps plus 60 bps, following talk in the 65-bps area.

The original €800 million 1 5/8% notes due 2025 priced in December at 98.892 to yield 1.745%, or mid-swaps plus 75 bps.

The €950 million notes due May 27, 2030 priced to yield mid-swaps plus 85 bps, following talk of a spread of 90 bps to 95 bps.

HSBC, JPMorgan and Santander were the bookrunners for the Securities and Exchange Commission-registered deal.

Other details were not immediately available on Tuesday.

The proceeds will be used for general corporate purposes.

Shanghai Electric does deal

Shanghai Electric Group, through Shanghai Electric Newage Co. Ltd., priced an upsized €600 million 1 1/8% notes due June 21, 2020 at 99.691 to yield mid-swaps plus 80 bps, according to a company announcement.

The notes were talked at a spread in the 95-bps area.

Bank of China, CCB International, Deutsche Bank, Morgan Stanley, ABC International, Haitong International, Huatai Financial, Intesa Sanpaolo, JPMorgan and Societe Generale CIB were the bookrunners for the Regulation S deal.

The power generation and equipment manufacturing company is based in Shanghai.

Formosa from Reliance

India’s Reliance Industries priced $200 million 5% notes due in 2035 at par to yield 5%, according to a company announcement.

Deutsche Bank and HSBC were the bookrunners for the Formosa bond.

The notes were issued primarily to Taiwanese insurance companies. The bond is the first Formosa bond for an energy company and the first-ever out of Asia.

Reliance Industries is a Mumbai-based petrochemical and retail conglomerate.

Starhill Global sells notes

In a small deal on Tuesday, Singapore’s Starhill Global REIT priced S$125 million 3.4% notes due May 26, 2023 at par to yield 3.4%, a market source said.

DBS and RHB Securities were the bookrunners for the Regulation S deal.

Starhill Global invests primarily in real estate for retail and office purposes in Singapore and overseas.

Roadshow for Century Sunshine

China’s Century Sunshine Group Holdings Ltd. will depart on Wednesday for a roadshow to market a Singapore dollar-denominated issue of notes, a market source said.

Oversea-Chinese Banking Corp. Ltd. is the bookrunner for the deal.

The issuer is a Hong Kong-based bio-organic fertilizer company.

Bank of Sharjah sets roadshow

The United Arab Emirates’ Bank of Sharjah will set out on May 21 for a roadshow to market a dollar-denominated and benchmark-sized issue of notes, a market source said.

JPMorgan, National Bank of Abu Dhabi, Commerzbank, Emirates NBD Capital and First Gulf Bank are the bookrunners for the Regulation S deal.

Chinese developer roadshow

China Vast Industrial Urban Development Co. Ltd. has mandated Morgan Stanley, ICBC International, JPMorgan and Citic CLSA Securities to lead a roadshow, a market source said.

The roadshow in Hong Kong and Singapore will begin on Thursday.

The industrial property developer is based in Hong Kong.

Beijing issuer attracts orders

The new issue from China-based Beijing State-Owned Assets Management Co. Ltd. – $1 billion issue of notes due May 26, 2020 and 2025 – drew an order book of more than $7.45 billion, a market source said.

The $300 million 3% notes due 2020 that priced at 99.467 to yield Treasuries plus 160 bps attracted more than $2.7 billion from more than 175 orders.

The $700 million 4 1/8% notes due 2025 that priced at 98.83 to yield Treasuries plus 205 bps saw an order book of more than $4.75 billion from 240 orders.

Citigroup and UBS were the bookrunners for the Regulation S deal.

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

Unibanco issues bonds

In another new deal from Monday, Brazil’s Itau Unibanco Holding SA priced $1 billion 2.85% notes due May 26, 2018 at 99.971 to yield 2.86%, or Treasuries plus 190 bps, a market source said.

The notes were talked at a spread in the low-200 bps area.

BB Securities, BofA Merrill Lynch, Citigroup, Itau BBA and Santander were 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.

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