Tingyi, AK Bars print notes; Asian bonds firm; Indonesia active; China Minmetals widens

By Christine Van Dusen

Atlanta, July 30 – Asian bonds started Thursday’s trading session on firm footing, with investment-grade cash bonds moving as much as 3 basis points tighter, but the rally was short-lived – by the end of the Asian session, when the United States released gross domestic product numbers, the notes closed unchanged.

Treasuries bounced around on the headline that the U.S. economy improved in the spring, news that raises the likelihood of a rate hike in September.

Against this backdrop, Tingyi (Cayman Islands) Holding Corp. and Russia’s AK Bars Bank OJSC sold new notes.

After a mix of short-covering for recent issues and oil-related names from Asia, profit-takers jumped into the fray, a London-based trader said.

China Minmetals Corp.’s new 3½% five-year notes that priced at 99.501 to yield 3.61%, or Treasuries plus 195 bps, traded at 200 bps before closing at 200 bps bid, 197 bps offered. On Wednesday the notes were seen at 205 bps bid, 202 bps offered.

The company’s other new tranche – 4¾% notes due 2025 that priced at 99.858 to yield 4.768%, or Treasuries plus 245 bps – moved to 251 bps, then 252 bps, on Thursday after Wednesday’s level of 257 bps bid, 252 bps offered.

Deutsche Bank, HSBC, JPMorgan, ICBC and Citigroup were the bookrunners for the Regulation S deal.

“The China oil curve was 3 bps to 5 bps tighter in the morning and closed unchanged to 3 bps tighter, with on-the-run names still well-bid,” the trader said. “China property [bonds] were in focus, with the sector 3 bps to 5 bps tighter.”

Korea flat, India tighter

Bonds from Korea were mostly unchanged, he said, while India's bonds tightened slightly amid some good demand for corporates.

“Malaysia closed unchanged, with better sellers today,” a trader said.

Looking to Indonesia, activity was strong and “whippy,” with some “decent bursts of selling,” a trader said.

The sovereign’s euro and dollar notes due in 2045 outperformed.

“The 2035s to 2038s remain heavy,” he said.

Lat-Am widens

Low-beta bonds from Latin America on Thursday morning saw prices trading near Wednesday’s closing levels, a New York-based trader said.

“EM curves are not witnessing the flattening move seen in the U.S. rates world, at the moment,” he said.

By the end of the session, spreads were slightly wider, a trader said.

Brazil's five-year credit default swaps spread was seen at 286 bps from 283 bps while Mexico's moved to 134 bps from 131 bps.

“A lack of liquidity and Treasury swings had markets navigating choppy ranges,” he said.

Bonds from Venezuela finished the day “broadly higher” while Argentina slumped, he said.

PDVSA’s 2017 notes closed the day at 66.50, versus Wednesday’s 64.75, and Venezuela's 2027s moved to 41.75 from 41.

Lat-Am corporates quiet

Overall, volumes and inquiries were low for corporate bonds from Latin America, another New York-based trader said at Thursday’s close.

Brazil-based Vale SA tightened 5 bps to 8 bps while Chile-based Corporacion Nacional del Cobre de Chile (Codelco) settled into a wider range that was initially driven by commodities weakness.

Brazil-based Odebrecht SA's curve was unchanged on much lower volumes, he said, while Mexico’s Cemex SAB de CV remained well-bid.

AK Bars sells bonds

In its new deal, Russia’s AK Bars Bank – through AK Bars Luxembourg SA – priced an upsized $350 million of three-year notes at par to yield 8%, a market source said.

The issue was upsized from a planned $300 million.

Pricing matched talk.

Credit Suisse and UBS were the bookrunners for the Regulation S deal.

AK Bars is based in Kazan, the Republic of Tatarstan, in Russia.

Issuance from Tingyi

In another deal on Thursday, Tingyi priced RMB 1 billion 4 3/8% three-year notes at 99.656 to yield 4½%, a market source said.

Deutsche Bank and Nomura International were the joint bookrunners and joint lead managers for the Regulation S offering.

The proceeds will be used to refinance existing debt and for general corporate purposes.

Tingyi is a food and beverage producer and distributor based in Tianjin, China.

DBS Bank deal draws orders

The new issue of $1 billion 1 5/8% covered bonds due 2018 that Singapore’s DBS Bank Ltd. priced Wednesday at 99.948 to yield 1.643%, or mid-swaps plus 37 bps, attracted $1.37 billion from 45 orders, a market source said.

DBS, Deutsche Bank AG, Singapore Branch, J.P. Morgan Securities plc and Societe Generale were the joint global coordinators, joint lead managers and joint bookrunners for the Rule 144A deal. Barclays Bank plc, Singapore Branch and Citigroup Global Markets Singapore Pte. Ltd. are joint lead managers and joint bookrunners.

About 51% of the orders came from Asia, 19% from the United States and 30% from Europe, the Middle East and Asia. Banks picked up 62%, fund managers 19%, central banks 9%, agencies 8%, corporates 1% and private banks 1%.

The proceeds will be used for general business purposes.

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