National Bank of Abu Dhabi, YPF, Exim India do deals; Greece, Ukraine, Kaisa get attention

By Marisa Wong

Atlanta, Feb. 4 – National Bank of Abu Dhabi PJSC, Argentina’s Yacimientos Petroliferos Fiscales (YPF), Export-Import Bank of India and China Construction Bank (Asia) Corp. Ltd. were among the issuers to print notes on Wednesday amid firm trading from Asia and tighter spreads for India’s bonds.

Meanwhile, Greece continued to negotiate its debt with its main creditors, proposing a swap of outstanding debt for a bond indexed to nominal economic growth. The sovereign also suggested printing another perpetual issue to replace Greek bonds owned by the European Central Bank, according to a report from Schildershoven Finance BV.

“It is still not clear whether the new proposals would be accepted by creditors, but investors assess them as a positive step in negotiations, which reduces the probability of a worst-case scenario, where Greece leaves the euro area.”

Wednesday also saw investors focus on Brazil-based Petroleo Brasileiro SA (Petrobras), which has seen its chief executive officer step down in the midst of a corruption scandal, a trader said. Then there was Tuesday’s news that Fitch Ratings had downgraded Petrobras’ rating.

“We think it will be difficult for a new CEO to steer the company away from two junk ratings over the next three months,” he said.

In response to this news, Petrobras’ bonds tightened at the open by as much as 30 basis points before retracing to about 15 bps tighter, a New York-based trader said.

Bonds from Brazil-based Odebrecht SA were mostly unchanged, even after a downgrade from Standard & Poor’s, he said.

Ukraine bonds under pressure

Ukraine so far this week has seen selling inquiries for its 2015s and 2016s, and short-dated sovereign bonds have been under pressure, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

The long end has stood unchanged, he said, ignoring Russia’s claims that Ukraine should repay a $3 billion loan.

Meanwhile, Ukraine’s talks with the International Monetary Fund are nearing completion, which could pave the way for talks with debt-holders, he said.

“It seems people have grown tired of all the headlines and are waiting for a clear message from the IMF,” he said. “Corporate bonds are still trading heavy, as nobody wants to show a bid.”

Asian bonds firm

Notes from Asia put in a firm session on Wednesday, as the sell-off in U.S. Treasuries moved high-grade cash bonds 1 bp to 3 bps tighter, a London-based trader said.

“Absolute yields attracted buyers,” he said.

Oil names were particularly strong, with those from China closing 5 bps to 10 bps tighter.

“But we had sellers into strength,” he said. “Away from that, recent issues also traded firmer.”

The new issue of 2025 notes from China’s Huarong Asset Management Co. Ltd. traded higher, he said, as did China Shenhua Overseas Capital Co. Ltd.’s 2025s.

The new 2025 notes from Korea Export-Import Bank – priced at 99.483 to yield 2.935%, or Treasuries plus 120 bps – traded at 97, then 99, before closing at par bid, 97 offered, he said.

Indian notes tighten

India put in another strong session, a trader said on Wednesday.

“Financials were another 5 bps tighter, corporates were 3 bps to 5 bps tighter and oil names were 5 bps to 8 bps tighter,” he said.

The new issue of notes from India’s Reliance Industries – $1 billion issue 10-year notes that came to the market at Treasuries plus 240 bps – saw sellers but still managed to tighten into the close on Wednesday, he said.

Profit-taking for Kaisa

Among high-yield names from Asia, Chinese property companies saw their bonds close higher on headlines that China-based Sunac Group’s chairman is looking to buy a 49.3% stake in Kaisa Group, a trader said.

“That sent the Kaisa complex 15 points higher at one point,” he said. “Profit-takers emerged and we closed the day 10 points higher.”

The news also gave China-based Shimao Property Holdings Ltd.’s new 8 3/8% notes due 2022 “a small pop,” he said.

The notes priced at par and traded near reoffer for most of the Asian session, moving up to about 100.20, he said.

“Sellers emerged, and bonds closed at 99 5/8 bid, 99 7/8 offered,” he said.

Russian CDS widen

Credit default swaps spreads for Russia started Wednesday about 3 bps wider after Tuesday’s significant tightening on the back of better oil prices, a London-based trader said.

“Oil and gas names were anywhere from 25 bps to 50 bps tighter [on Tuesday],” he said.

Turkish credit default swaps spreads opened unchanged on Wednesday as investors focused mostly on Asya Katilim Bankasi AS (Bank Asya). Regulators have taken over a majority stake in the lender.

“Clearly the bank has been under pressure for some time, with substantial deposit outflow, for example,” he said. “So this was always a very real possibility and will not come as a major surprise ... Initial thoughts are that the state majority ownership is being taken positively.”

And bonds from Central and emerging Europe opened slightly tighter on Wednesday on the move in rates, he said, with Croatia a standout after experiencing recent weakness.

NBAD sells bonds

Looking to the Middle East, spreads tightened somewhat on rates, a trader said.

This came as National Bank of Abu Dhabi sold $750 million 2¼% notes due Feb. 11, 2020 at 99.61 to yield mid-swaps plus 85 bps, a market source said.

The notes were talked at a spread in the 90-bps area.

Citigroup, HSBC and Standard Chartered were the bookrunners for the Regulation S deal.

Issuance from YPF

Argentina-based energy company YPF priced a $500 million issue of notes, tapping its 8 7/8% notes due Dec. 19, 2018 and its 8¾% notes due Aug. 4, 2024, a market source said.

The 2018 notes came to the market a yield of 8½%. The 2024 notes printed with a 8.95% yield.

Citigroup, Itau Unibanco and JPMorgan were the bookrunners for the deal.

Other pricing details were not immediately available on Wednesday.

Exim India prices bonds

Export-Import Bank of India printed $500 million 2¾% notes due Aug. 12, 2020 at 99.404 to yield Treasuries plus 155 bps, a market source said.

Barclays, Citigroup and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Primary sees CCB

China Construction Bank priced €500 million 1½% notes due Feb. 11, 2020 at 99.938 to yield mid-swaps plus 120 bps, a market source said.

China Construction Bank, Deutsche Bank and HSBC were the bookrunners for the Regulation S deal.

The lender is based in Beijing.

Halkbank launches notes

Ankara, Turkey-based Turkiye Halk Bankasi (Halkbank) launched a $500 million issue notes due Feb. 11, 2021 at mid-swaps plus 322 bps, a market source said.

The notes were talked at a spread in the 340 bps area.

BofA Merrill Lynch, Commerzbank, Deutsche Bank, Erste Group, ING and Natixis are the bookrunners for the Rule 144A and Regulation S deal.

“We think the deal will gather interest,” a trader said. “The bank is likely to dispose of its insurance business in the near future, which should help capital.”

Guidance from Intercorp

Intercorp Peru Ltd. set talk in the 6¼% area for a dollar-denominated issue of 10-year notes, a market source said.

Citigroup and Credit Suisse are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used primarily to refinance debt.

Intercorp is a Lima, Peru-based financial services company.

MAXpower, Lithuania plan deals

In other deal-related news, Indonesia’s MAXpower Group Pte. Ltd. set talk in the 11¾% area for its upcoming issue of $250 million notes due in five years, a market source said.

The notes will be non-callable for three years.

The issuer is a Jakarta-based gas-to-power specialist and plant operator.

And Lithuania could issue up to €1.5 billion of notes this year, a market source said.

Other details were not immediately available on Wednesday.

Reliance draws orders

The issue of notes that India’s Reliance Industries priced on Tuesday – $750 million 4 7/8% notes due in 2045 that came to the market at 98.865 to yield 4.948%, or Treasuries plus 262.5 bps – was more than three times oversubscribed, according to a company announcement.

The notes were talked at a spread in the 265 bps area.

About 47% of the orders came from Asia, 8% from Europe and 45% from the United States. Fund managers picked up 52%, insurance companies 31%, pension funds 8%, central banks and sovereign wealth funds 6%, banks 2% and private banks 1%.

Barclays, BofA Merrill Lynch, Citigroup and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

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