Indonesia gives guidance; new TSKB bonds trade higher; Asia weakens; roadshow for Ezdan

By Christine Van Dusen

Atlanta, March 22 – Indonesia advanced a new issue on a mostly solid Wednesday for emerging markets assets, even as a terrorist attack in London – as well as poor results from Nike and concern about the fate of health care in the United States – weakened general market sentiment.

The positive attitude toward emerging markets was “probably best reflected by [Turkiye Sinai Kalkinma Bankasi AS (TSKB)]’s tier 2 deal,” a London-based analyst said.

The Istanbul-based lender on Tuesday priced $300 million 7 5/8% green bonds due 2027 at par to yield 7 5/8%.

Citigroup, HSBC, JPMorgan, Societe Generale and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The pricing was “slightly more than we would have expected,” he said.

On Wednesday the notes were seen trading up by as much as 2½ points from reoffer, a trader said.

This came against the backdrop of some market malaise, with “markets in the process of finding a clear direction,” he said.

Also on Wednesday, market-watchers were whispering about the possibility of a $500 million eurobond from Russia’s OJSC MMC Norilsk Nickel and a similar issue from Russia’s OJSC Alfa Bank. Investors were also looking ahead to the $500 million issue of notes that is expected to price this week from Paraguay.

In trading, buying was “solid” for many EM names, a London-based trader said.

“Solid buying again today despite what to me looks like some warning signals,” he said. “Oil and equities both look vulnerable for a leg down. U.S. rates have rallied and look to have limited further upside, and Asia reported a weak session.”

Correction could come

Wednesday’s trading activity looked like “inflow money being deployed,” the trader said, and “real-money EM investors shrugging off all of the above and happily adding risk.”

But “it’s getting harder not think we are due some sort of correction,” he said.

Weak day for Asia

Though much of the emerging markets universe was in good shape on Wednesday, the session proved to be “fairly weak” for many Asian names, a trader said. Dealers were pushing high-beta and recent issues moved between 3 basis points and 6 bps wider.

“Off-the-run issues held in better, although retail, and to a lesser extent real money, were happy to continue to sell into higher cash prices,” he said. “Recent issues were hardest hit.”

Meanwhile, paper from India held up well, he said.

“Malaysian and Singaporean corporates were untraded but better offered to finish wider by 3 bps,” he said.

Slight widening seen

Investment-grade financial names from Asia closed their session 2 bps to 4 bps wider while high-beta paper moved out 3 bps to 5 bps, another trader said.

“China bank seniors were 1 bp to 2 bps wider,” he said. “Korea banks were touch wider while new India banks were 1 bp to 3 bps wider across.”

Among high-yield sovereigns, it was a weaker session, with the Philippines curve closing ¼ point wider on spread, another trader said.

“The Indonesia curve closed unchanged after opening 1 point to 2 points higher,” he said.

Saudi Arabia busy

From the Middle East, the three-tranche issue of notes due in 2021, 2026 and 2046 from Saudi Arabia again saw some activity in trading.

The 2 3/8% notes due in 2021 that priced at 99.007 to yield 2.588%, or Treasuries plus 135 bps, were seen at 97.93 bid, 98.23 offered after Tuesday’s 97.81 bid, 98.06.

The 3¼% notes due in 2026 that priced at 98.679 to yield 3.407%, or Treasuries plus 165 bps, moved to 96½ bid, 96¾ offered after Tuesday’s 96.30 bid, 96½ offered.

And the 4½% notes due in 2046 that priced at 98.015 to yield 4.623%, or Treasuries plus 210 bps, were seen Wednesday at 97.81 bid, 97.96 offered after Tuesday’s 97¾ bid, 97.87 offered.

Citigroup, HSBC, JPMorgan, Bank of China, BNP Paribas, Deutsche Bank, Goldman Sachs, MUFG Securities, Morgan Stanley and NCB Capital were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general domestic budgetary purposes.

Indonesia sets talk

For its upcoming deal, Indonesia gave initial guidance for a two-tranche, dollar-denominated issue of Islamic bonds due in five and 10 years, a market source said.

The notes will be issued via Perusahaan Penerbit SBSN Indonesia III (PPSI-III) under the program.

The five-year notes were talked at 3¾% and the 10-year notes were talked at 4½%.

Other details were not immediately available on Wednesday.

Ezdan holds roadshow

Qatar’s Ezdan Holding Group is holding a roadshow this week for a benchmark-sized issue of dollar-denominated notes due in five years, a market source said.

The roadshow is being held in Asia.

Other details were not immediately available on Wednesday.

The issuer is a real estate developer.

Al Ahli Bank taps bookrunners

Al Ahli Bank of Kuwait has mandated Citigroup, HSBC and National Bank of Abu Dhabi as bookrunners for a dollar-denominated issue of five-year notes, a market source said.

Other details were not immediately available on Wednesday.

IDB picks banks

Islamic Development Bank has mandated Emirates NBD, Goldman Sachs, Gulf International Bank and Standard Chartered Bank as bookrunners for a dollar-denominated issue of Islamic bonds, a market source said.

Other details were not immediately available on Wednesday.

The issuer is a Jeddah, Saudi Arabia-based lender.

Shinhan prices bonds

On Tuesday, South Korea’s Shinhan Bank priced $500 million 2 7/8% notes due 2022 at par to yield 2 7/8%, a market source said.

Credit Agricole, HSBC, JPMorgan, Mizuho Securities, Morgan Stanley, Shinhan Asia and Shinhan Investment Corp. led the Rule 144A and Regulation S transaction.

The lender is based in Seoul.

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