ICT, Access Bank deals ahead; investors eye Deutsche Bank, Brexit; Lat-Am quieter, weaker

By Christine Van Dusen

Atlanta, Oct. 3 – Philippines-based International Container Terminal Services Inc. and Nigeria’s Access Bank plc advanced deals on Monday as investors closely watched developments with Deutsche Bank AG, as well as the United Kingdom’s plans to exit the European Union.

“We’re going into the last quarter of the year, which looks like a decent start, driven by a combination of rumors on a lower settlement between Deutsche Bank and the U.S. Department of Justice, recovering oil prices and a positive sentiment led by Asia,” a London-based analyst said. “Overall sentiment should remain in favor for [emerging markets] credit, despite some rather mixed weeks in September.”

While several risk factors emerged in September – the U.S. presidential campaign, monetary policy, fears about the German banking system and ratings actions – they “haven’t derailed the benevolent market backdrop for EM risks so far,” he said.

Monday also saw corporate bonds from Colombia weaken as the Colombian electorate rejected a peace deal with the FARC rebels.

“We expect some correction in Colombia’s bond market and increased currency pressure as a result of this announcement,” according to a report from Schildershoven Finance BV.

Banks were taking the biggest hit, a trader said, while Ecopetrol SA was weaker and quieter.

Banks from Peru continued to trade within their recent range, and high-grade names were unchanged, the trader said.

“Chile high-grade corporates remain remarkably quiet and have also stabilized at slightly lower levels after market weakness” brought on by the Fed, he said.

“Even the Cencosud SA curve has gone fairly quiet among account bases that are usually consistently active,” he said.

Corporate bonds from Mexico were “trying hard to stabilize” on Monday, “with much less volume,” the trader said.

“Banks continue to trade weakly,” he said.

Samarco to restructure debt

Also from Latin America, Brazil-based Samarco Mineracao SA’s bondholders have hired an investment bank to negotiate a debt restructuring proposal.

“Samarco failed to pay a coupon on its debt due to a lack of liquidity,” Schildershoven said. “The company’s bonds are currently under pressure. The probability of support from strong shareholders continues to be moderate, as there are a lot of uncertainties regarding a possible claim from prosecutors.”

Samarco, a mining company owned by BHP Billiton Ltd. and Vale SA, was in the news last year after its Fundao dam broke open, killing at least 11 people as it released billions of gallons of mud.

Asia mixed, Turkey tighter

Sovereign bonds from Asia were mixed on Monday morning, Schildershoven said in a report.

Indonesia’s 10-year dollar notes were up 2 basis points, while Malaysia’s were 37 bps lower. China’s 2027s, meanwhile, moved up 43 bps, the report said.

In other trading, the sovereign curve for Turkey tightened as much as 5 bps on Monday, with the release of strong consumer price figures and better-than-expected inflation data for September, a trader said.

Banks saw better sellers while corporates were mixed, he said.

From Russia, better-than-expected manufacturing data for September “may add some confidence to investors buying Russian sovereign bonds,” Schildershoven said.

ICT to issue notes

Philippines-based International Container Terminal Services subsidiary Royal Capital BV is planning to issue new perpetual notes with a tender offer, according to a company announcement.

Citigroup, HSBC and Standard Chartered Bank are the joint dealer managers for the deal.

The company is inviting holders of its $300 million 6¼% perpetual notes and its $450 million 5½% perpetual notes to submit tender offers for purchase for cash up to $400 million of the aggregate principal amount of the perpetual securities.

International Container is a Manila-based port operator.

Deal ahead from Access Bank

Nigeria’s Access Bank is planning to issue new dollar-denominated notes due in October of 2021 with a tender offer, according to an announcement from the company.

The company is inviting holders of its $350 million 7¼% notes due 2017 to exchange the notes for the new dollar notes.

The new issue will have a minimum size of $300 million.

Barclays Bank, Citigroup, JPMorgan and Citibank are the dealer-managers for the deal.

Latvia draws orders

The new €1 billion issue of notes from Latvia was 2.6-times oversubscribed, according to an announcement from the sovereign's finance ministry.

On Friday Latvia priced €1 billion 0.375% notes due in 2026 at a yield of 0.456%, or mid-swaps plus 19 bps.

JPMorgan, Barclays Bank and Goldman Sachs were the bookrunners for the Regulation S deal.

“The issuance was well received from more than 90 investors,” the announcement said. “Investors were mainly from Europe.”

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