Czech Republic’s Cetin advances deal; oil meeting on deck; Asian bonds widen; Evraz eyed

By Christine Van Dusen

Atlanta, Nov. 29 – Czech Republic-based Ceska telekomunikacni infrastruktura as (Cetin) advanced a three-tranche deal on Tuesday as some Asian bonds moved wider and investors awaited Wednesday’s meeting of oil producers.

“Only one day left before the OPEC meeting in Vienna, but the agreement on an output freeze or cut still has not been reached,” according to a report from Schildershoven Finance BV. “Volatility in the oil market may increase in coming days, which should impact the EM Eurobonds too.”

Russia’s energy minister was set to meet with officials from Algeria and Venezuela to attempt to finalize output cuts before the meeting. “Meanwhile, OPEC officials failed to work out a compromise on a deal to cut production and boost crude prices on Monday,” the report said.

Against this backdrop, Asian bonds moved wider on Tuesday, with notes from Indonesia adding 25 basis points and China’s widening by about 5 bps.

“Trying to get a read on this market is quite tough at the moment,” a London-based trader said. “With the weaker dollar we have seen some tightening in the EM space over the past few days, but I have to question how much investor buying there has actually been.”

He believes the short base has been taking profits ahead of a data-heavy week, month-end and a lull in headlines.

“This in turn has led the Street to start short-covering EM risk that they have sold over the last few weeks,” he said. “Why do I think it’s mainly short-covering? Client buying has been light and focused on technically squeezed bonds no one wants to short, so I don’t see this move as client- and inflow-driven.”

Risk is avoided

With EM spreads as they are, “no one actually wants to add risk here, given the risk-reward payout for the remainder of 2016,” the trader said.

“If anything, this is a little window to sell some risk and move into defensive positioning,” he said.

Evraz could sell port

Taking another look at Russia, Evraz Group SA received some attention on Tuesday on the news that it could sell its Nakhodka port.

“The possible sale of Nakhodka port is positive news for Evraz, as it may slightly improve its debt burden,” Schildershoven said. “However, given the port valuation of $300 million, the impact on the company’s debt will be quite moderate.”

Cetin to issue three tranches

For its upcoming deal, Czech Republic-based Cetin is planning a three-tranche issue of euro- and koruna-denominated notes due in one, five and seven years, according to a company announcement.

The notes will be issued via Cetin Finance BV.

The five-year notes will be denominated in euros, and the one- and seven-year notes will be denominated in korunas. Each tranche will be benchmark-sized.

BNP Paribas, Citigroup, HSBC, ING and Societe Generale CIB are the bookrunners for the euro notes. HSBC and PPF Banka are leading the koruna transactions.

The telecommunications company is based in Prague.

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