Brazil, Panama do deals; ECB sets off ‘whipsaw’ session; Lat-Am tightens; roadshows ahead

By Christine Van Dusen

Atlanta, March 10 – Brazil and Panama sold notes on Thursday as risk assets managed gains – with spreads tightening for some Latin American names – even as the European Central Bank’s announcements made for a “whipsaw” session for the larger markets.

The ECB cut its main rate and its bank deposit rate while also expanding its quantitative easing program.

“Whipsaw day for global markets,” a trader said. “But Lat-Am external sovereign credit manages to etch out some small gains.”

Indeed, Brazil’s five-year credit default swaps spreads closed at 392 basis points from 402 bps, while Mexico’s moved to 171 bps from 172 bps.

“Cash prices were initially higher but close mostly unchanged as Treasury and commodity weakness subdue recent enthusiasm,” he said. “Lat-Am high-yield finishes mixed on the session, with Argentina mostly unchanged and Venezuela weaker.”

Argentina’s Bonar 2024s closed at 107.75 from 108, while Venezuela’s 2027s moved to 40 from 41.75, and PDVSA’s 2017s finished at 52.75 from 54.

“Flows today saw better sellers of EM credit as Brazil and Panama supply put some upward pressure on intermediate yields,” a trader said.

In its new deal, Brazil priced $1.5 billion 6% notes due April 17, 2026 at 99.066 to yield 6 1/8% via BofA Merrill Lynch and JPMorgan in a Securities and Exchange Commission-registered deal.

The proceeds will be used for general budgetary purposes.

And Panama sold $1 billion 3 7/8% notes due March 17, 2028 at 99.015 to yield 3.979%, or Treasuries plus 205 bps via Credit Suisse and Morgan Stanley in an SEC-registered deal.

The proceeds will be used for general governmental purposes, including the refinancing of debt.

Turkey in focus

In trading, banks from Turkey were firm on Thursday, a trader said.

“We have again managed to firm, as real-money continues to put money to work,” he said. “Even the new Turkey 2026 deal has started to perform.”

Turkey corporates, meanwhile, underperformed, “with [Koc Holding] coming to the market,” he said. “But I think they are cheap here.”

Turkey’s Koc on Wednesday priced $750 million 5¼% notes due 2023 at 99.135 to yield 5.4%, following talk of 5½% to 5 5/8%.

BNP Paribas, Citigroup, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Koc trades

On Thursday morning, Koc’s notes were seen at 99.86 bid, 99.99 offered.

“Morning flow has been OK, but nothing special,” a trader said. “Sitting about 85 bps wide to the sovereign it should have more upside, but without new buyers jumping in I think it’s going to take a little time to get to our 75-bps target. Until then it’s a nice play on the Turkey complex.”

Later in the day the notes were quoted at 99.45 bid, 99.70 offered.

Another new issue saw some action on Thursday. Kuwait Projects Co.’s $500 million 5% notes due 2023 that priced at par to yield mid-swaps plus 324.6 bps moved to 99.85 bid, 100.05 offered, another trader said.

The notes were initially talked at a yield in the 5¼% area.

BNP Paribas, Citigroup, HSBC and JPMorgan are the bookrunners for the Regulation S deal.

Koc draws orders

The final order book for Koc’s new deal totaled more than $1.25 billion from more than 165 accounts, a market source said.

About 32% of the orders went to Europe, 28% to Asia, 23% to the United Kingdom, 14% to the Middle East and 3% to offshore U.S. investors. Fund managers picked up 44%, private banks 25%, banks 15%, hedge funds 8%, insurance 5% and others 3%.

Southern Gas Corridor roadshow

Azerbaijan’s Southern Gas Corridor CJSC set out on Thursday for a roadshow to market a benchmark-sized issue of dollar-denominated notes, a market source said.

Citigroup, JPMorgan and UniCredit are the bookrunners for the Rule 144A and Regulation S deal.

The issuer is owned by the Republic of Azerbaijan and represents the country’s interest in the Southern Gas Corridor Project, a cross-border gas value chain.

Marketing trip for Indonesia

Republic of Indonesia on Thursday embarked on a roadshow to market a dollar-denominated issue of Islamic bonds, a market source said.

CIMB, Citigroup, Deutsche Bank, Dubai Islamic Bank and Standard Chartered Bank are the bookrunners for the Rule 144A and Regulation S deal.

KNOC has roadshow ahead

Korea National Oil Corp. has mandated Citigroup, Credit Agricole CIB, Goldman Sachs, HSBC, JPMorgan and the Korea Development Bank to arrange a roadshow beginning March 14, a market source said.

An issue of bonds is expected to follow.

Other details were not immediately available on Thursday.

Korea National Oil is an oil and gas production and exploration company based in Anyang, South Korea.

Asian sovereigns strengthen

In trading from Asia, sovereign names were solid, a trader said.

“Asia is having a strong session, with Indonesia and Philippines curves being lifted,” he said.

Said a strategist, “There has been a decent pick-up in primary market activity.”

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