Bank of Communications, India’s Adani Ports bring new deals; EM investors still risk-averse

By Christine Van Dusen

Atlanta, July 22 – China’s Bank of Communications and India’s Adani Ports and Special Economic Zone Ltd. sold preference shares and notes on Wednesday as Asian bonds closed their session unchanged or 3 basis points wider and investors remained cautious.

The 2025 notes from both China-based Cnooc Ltd. and China Petroleum & Chemical Corp. (Sinopec Group) closed lower, a London-based trader said.

“Korea was quiet and unchanged,” he said. “India closed a touch wider today, with some profit-taking after the recent rally.”

The new issue of notes from Beijing’s CCB Financial Leasing Corp. Ltd. – $500 million 3¼% notes due in 2020 that priced overnight at 98.331 to yield 3.618%, or Treasuries plus 190 bps – traded as tight as 183 bps before moving to 186 bps and closing at 188 bps bid, 185 bps offered.

CCB International, HSBC, Morgan Stanley and Standard Chartered Bank were the joint global coordinators, joint bookrunners and joint lead managers for the Regulation S deal.

ANZ, Citigroup, DBS Bank and UBS were joint bookrunners and joint lead managers.

“Rest of Asia also feels a touch weaker,” another trader said. “Seeing some papers coming out, especially in the China internet space, widening by 3 bps to 5 bps.”

Indonesia’s bonds moved about 25 cents lower, he said.

“So far buyers have been very cautious and selective,” he said.

From Latin America, Pacific Rubiales Energy Corp.’s bonds were “holding up surprisingly well” in the day’s “pretty weak market for risk,” a New York-based trader said.

But overall, notes from the region suffered on Wednesday, another trader said.

“The opening tone in Lat-Am is poor,” he said. “Brazil credit default swaps spreads opened 7 bps wider, and that is spilling over to further depress corporate risk appetite.”

Pemex in focus

Bonds from Mexico City-based petroleum company Petroleos Mexicanos SAB de CV traded at, or close to, record wides versus Mexico, another trader said.

“And yet there seem to be no buyers of Pemex,” he said. “The long end is particularly cheap.”

The company’s 2041s were trading a “whopping 120 bps to 125 bps wider than Mexico’s 2044,” he said. “In the belly, the Pemex 2024 is the cheapest.”

This came as Pemex set talk at mid-swaps plus 55 bps to 57 bps for a dollar-denominated and benchmark-sized issue of notes due in 10 years, a market source said.

Credit Agricole CIB, Citigroup and Santander are the bookrunners for the deal.

Spreads widen

Low-beta spreads for Latin American assets widened on the day amid ongoing weakness in commodities, a New York-based trader said.

Credit default swaps spreads for Brazil closed at 275 bps from 266 bps while Mexico’s moved to 127 bps from 126 bps.

Very little liquidity was reported at the end of the day, except for Brazilian assets, he said.

Venezuela’s bonds were unchanged while Argentina’s weakened.

BOC prices tier 1 deal

In its new deal, Bank of Communications sold $2.45 billion 5% non-cumulative perpetual offshore preference shares at par to yield 5%, a market source said.

Bocom HK, Bocom International, Deutsche Bank, HSBC, Citic CLSA, CCB International, Goldman Sachs Asia, Citigroup and JPMorgan were the bookrunners for the Regulation S deal.

Bank of Communications is a Shanghai-based financial institution.

Adani Ports sells bonds

Adani Ports and Special Economic Zone sold $650 million 3½% notes due July 29, 2020 at 99.524 to yield Treasuries plus 195 bps, a market source said.

BofA Merrill Lynch, Barclays Capital, Citigroup and Emirates NBD Capital were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to fund new projects.

The issuer is based in Gujarat, India.

Talk from Rustavi Azot

Georgia’s Rustavi Azot LLC set talk at 11% to 13% for a dollar-denominated issue of five-year notes, a market source said.

Citigroup and Galt & Taggart are the bookrunners for the Regulation S deal.

The nitrogen fertilizer manufacturer is based in Rustavi, Georgia.

Roadshow for Shanghai Electric

China’s Shanghai Electric Power Co. will set out on Thursday for a roadshow to market a dollar-denominated issue of notes, a market source said.

HSBC and Bank of China are the joint global coordinators and – with Deutsche Bank and Morgan Stanley – the joint lead managers and joint bookrunners for the Regulation S deal.

The issuer is a power generation and equipment manufacturing company.

Sagicor sets roadshow

Barbados-based Sagicor Financial Corp. will set out on July 27 for a roadshow to market a possible issue of dollar-denominated notes, a market source said.

JPMorgan and Scotiabank are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow will start in London and travel to Boston and Los Angeles before concluding on July 30 in New York.

The issuer is an insurance and financial services provider that focuses its business on Latin America and other markets.

Zambia releases details

Zambia’s new dollar-denominated issue of notes will be amortizing and due in July 2027, a market source said.

The notes will have an 11-year average life and three equal redemption payments in July 2025, July 2026 and July 2027.

Barclays and Deutsche Bank are the bookrunners for the Rule 144A and Regulation S deal, which is expected to price on Thursday.

“This deal has been very well-telegraphed from at least early June, if not earlier,” a trader said.

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