Pemex prices notes; Asian bonds flat; Turkey, Ukraine outperform; Poland plans green bonds

By Christine Van Dusen

Atlanta, Dec. 6 – Mexico-based Petroleos Mexicanos SAB de CV (Pemex) priced notes on Tuesday amid flat trading of Asian bonds and better performance from Turkey and Ukraine.

The 2027 notes from China were down 2 basis points, while notes from Indonesia were up about 15 bps, a trader said.

In trading from Turkey, bonds were solid, a trader said.

“Turkey is outperforming, about 10 basis points to 12 bps tighter in cash, with buyers in the long end,” he said.

This came as Fitch Ratings reported expectations that Turkish banks will face pressure into the end of the year and the beginning of 2017. Though lenders showed modest growth during the first three quarters of 2016, they could take a hit as the lira depreciates, interest rates rise and the economy experiences weaker growth.

Still, “we believe that the financial strength of the major financial institutions in the country will remain solid,” according to a report from Schildershoven Finance BV.

From Latin America, Brazil-based JBS SA announced plans for an initial public offering of its international business, including United States and United Kingdom operations.

“Additionally, it includes Brazilian chicken and processed-food producer Seara,” according to a report from Schildershoven Finance BV. “The current announcement may become positive for bondholders, as it may lead to the substantial leverage reduction.”

Meanwhile, trading of bonds from Ukraine has been “constructive” so far this week, said Svitlana Rusakova, of Dragon Capital (Cyprus) Ltd.

The sovereign has added about ¼ point across the board, with quasi-sovereigns moving up ½ point to ¾ point.

Corporates have been less liquid, she said.

Pemex prices three tranches

In its new deal, Mexico’s Pemex priced a three-tranche issue of $5.5 billion notes due in five and 10 years, a market source said.

The $1.5 billion fixed-rate notes due in five years priced at 5½%, following talk in the low-6% area.

The $1 billion five-year floating-rate notes priced at par to yield Libor plus 365 bps.

The $3 billion 10-year fixed-rate notes priced at 6 5/8% after talk in the low-7% area.

BofA Merrill Lynch, Citigroup, JPMorgan, Mizuho Securities and Morgan Stanley were the bookrunners for the deal.

Other details were not immediately available on Tuesday.

Pemex is a petroleum company based in Mexico City.

Poland sets roadshow

In other news, Poland will set out on Wednesday to market an issue of euro-denominated green bonds due in five years, according to an announcement from the sovereign and a market source.

HSBC, JPMorgan and PKO BP are the bookrunners for the deal.

The roadshow will end on Dec. 9.

This would be the first green bond issued by a sovereign.

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