Issuance from Ooredoo; Fed decision, Brexit keep EM investors on their toes; Indonesia sees demand

By Christine Van Dusen

Atlanta, June 15 – Qatar’s Ooredoo QSC sold notes on Wednesday as the Federal Reserve’s decision to leave interest rates unchanged gave emerging markets assets an early – but, for many names short-lived – boost.

“The Fed chair seemed to give the green light to bid up risk today but the market could not hold,” a trader said. “Is this a sign of technical resistance, as buying is exhausted? Or are investors evaluating whether current levels are justified in a low growth and uncertain economic environment?”

Also impacting the big picture on Wednesday was continued concern about whether the United Kingdom would exit the European Union.

“It is remarkable how suddenly Brexit risk has become a key driver in markets,” a London-based strategist said.

For emerging markets, “the favorable backdrop we have seen the last few weeks has disappeared, with further tail risks, for which Brexit mainly takes the blame for, leading to wider credit spreads and risk aversion,” he said.

Still, Latin American bonds managed to finish the day on solid footing after a “very whippy” session, a New York-based trader said.

“Initially risk was well-bid to kick off the day but then it faded a bit into the Fed,” he said. “Post-Fed euphoria initially had the entire market bid, but this quickly reversed.”

Brazil saw its five-year credit defaults swaps spreads close at 354 basis points from 358 bps while Mexico’s moved to 180 bps from 181 bps.

“Cash prices outperform CDS levels and United States Treasuries, with bonds very well bid and in seemingly short supply,” he said.

High yield trades higher

High-yield names from Latin America traded well on the day, with Venezuela and Argentina moving higher, the New York trader said.

Venezuela’s 2027s closed at 43.75 from 43.50, PDVSA’s 2017s closed at 67.50 from 66.75 and Argentina’s Bonar 2024s were up at 112.625 from 112.

The sovereign’s 2026s closed at 106 from 104.90.

Petrobras eyed

Investors were eyeing Brazil-based Petroleo Brasileiro SA after the company’s chief executive indicated that the company would increase the selling prices of gasoline and diesel “in the nearest future,” according to a report from Schildershoven Finance BV.

“The Brazilian oil giant is seeking to improve its current challenging financial situation,” the report said. “The fact that policy makers are trying to improve Petrobras’ financial position is positive for the country’s capital market and for the oil producer’s bonds as well.”

Ukraine bonds weaken

Ukraine bonds have weakened so far this week, “with a global risk-off theme being the key driver,” said Fyodor Bagnenko, a fixed income trader with Dragon Capital.

Most of the curve moved about ¾-point down into mid-week, he said.

Qatar’s Ooredoo sells bonds

In its new deal, Qatar’s Oordeoo priced a $500 million issue of 3¾% notes due June 22, 2026 at mid-swaps plus 240 basis points, according to an announcement from the company.

Pricing was at the tight end of talk for a spread of 240 bps to 245 bps.

HSBC was the global coordinator, and ANZ, BofA Merrill Lynch, Citigroup, DBS Bank, HSBC, Mizuho Securities, MUFG Securities and QNB Capital were the joint lead managers and joint bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Ooredoo is the Doha-based telecommunications company formerly known as Qtel International.

Indonesia attracts orders

The new issue of notes from Indonesia – €3 billion in two tranches due 2023 and 2028 – drew a significant order book, according to an announcement from the sovereign.

The €1.5 billion of 2 5/8% notes due 2023 that priced at 99.076 to yield 2.772%, or mid-swaps plus 260 basis points, attracted €4.23 billion in orders from 276 accounts.

The notes were talked at a spread in the 280 bps area.

The €1.5 billion of 3¾% notes due in 2028 that priced at 98.528 to yield 3.906%, or mid-swaps plus 325 bps, drew €4.13 billion in orders.

The notes were talked in the 345 bps area.

“The offering represents the Republic’s largest euro bond offering to date and its first dual-tranche euro bond offering,” the announcement said.

Barclays, Deutsche Bank and JPMorgan were the joint bookrunners.

The proceeds will be used for general budgetary purposes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.