Haitong, International Container issue notes; ECB remarks spark rally, tighten EM spreads

By Christine Van Dusen

Atlanta, Jan. 22 – China’s Haitong International Securities Group Ltd. and Philippines-based International Container Terminal Services Inc. sold notes on Thursday as investors focused on the European Central Bank and quantitative easing.

After the European Central Bank announced plans for at least $1.3 trillion in quantitative easing, many emerging markets bonds “rallied hard,” a London-based trader said.

“Any decent offer in the market was lifted,” he said. “I’d be surprised if the syndicate desks were not busy lining up some conference calls regarding some supply.”

On Thursday morning, Russia’s credit default swaps opened 2 basis points tighter following Wednesday’s meeting of foreign ministers from Russia, Ukraine, France and Germany produced positive results, a London-based analyst said.

“Nonetheless, with Ukraine increasing its army size and reports of Russian solders fighting in Ukraine, we don’t expect this meeting to improve investor sentiment towards Russia,” he said.

From Turkey, sovereign bonds tightened about 3 bps on Thursday morning and credit default swaps spreads narrowed 1 bp on the move in Treasuries.

And Poland’s bonds tightened as much as 3 bps on the Treasury move.

Looking to the Middle East, some spreads tightened on Thursday morning and recent trends – investment-grade and low-beta names outperforming high-yield and high-beta names – continued, another London-based trader said.

From Asia, the tone remained firm and high-grade cash bonds closed the session 2 bps to 4 bps tighter, a trader said.

“The China oil complex closed 2 bps to 5 bps tighter,” he said. “China financials ended 3 bps to 5 bps tighter.”

In deal-related news, market sources were also whispering about possible upcoming issues of notes from South Africa’s Eskom Holdings SOC Ltd. and Kuwait’s BBK.

Asian notes slip

In trading, Export-Import Bank of Korea’s (Kexim) new 4% notes due 2017 that priced at 99.807 traded to tights of 90 before closing at 91 bid, 88 offered, a trader said.

The Philippines 2040 notes moved down to 107 before closing at 106 7/8 bid, 107 1/8 offered, while Indonesia’s 2045s slipped to 104 before closing at 103¾ bid, 104¼ offered.

Petrobras tightens

From Latin America, Brazil’s Petroleo Brasileiro SA moved tighter by as much as 25 bps on the short end, driven by dealers’ improved view of the macro picture, a New York-based trader said.

Better buyers emerged from nearly all of his account bases on Thursday, he said.

Vale SA moved in a few basis points “in sympathy,” he said.

Bonds from Chile and the Mexican high-grade chemical complex moved higher, he said.

Mexico-based Cemex SAB de CV’s curve was up, though real-money clients were better sellers on Thursday.

Haitong prints notes

Haitong International Securities, through subsidiary Haitong International Finance 2015 Ltd., priced $700 million 4.2% notes due Jan. 29, 2020 at 98.591 to yield 4.492%, or Treasuries plus 310 bps, a market source said.

Deutsche Bank, Haitong International, HSBC and Huatai Financial were the bookrunners for the Regulation S deal.

The proceeds will be used primarily for general corporate purposes.

The financial services company is based in Hong Kong.

International Container notes

Philippines-based International Container Terminal Services sold $300 million 6¼% perpetual notes at 99.551 to yield 6 3/8%, or Treasuries plus 499.3 bps, a market source said.

Citigroup and HSBC were the bookrunners for the Regulation S deal.

The new securities were issued concurrently with a tender offer for existing perpetual securities.

International Container is a Manila, Philippines-based port operator.

Religare cancels plans

Singapore’s Religare Health Trust Trustee Manager Pte. Ltd. has postponed its plans for a benchmark-sized and dollar-denominated issue of notes, a market source said.

DBS Bank, Deutsche Bank, Religare Capital Securities and Standard Chartered Bank were the bookrunners for the expected Regulation S transaction.

The company is a Singapore-based business trust managed by Religare Health Trust Trustee Manager Pte. Ltd., a wholly owned subsidiary of Religare Enterprises Ltd., a financial services group based in New Delhi.

Colombia sells bonds

Late on Wednesday, Colombia priced a $1.5 billion issue of 5% notes due June 15, 2045 at 99.018 to yield 5.064%, or Treasuries plus 262.5 bps, a market source said.

JPMorgan and Morgan Stanley were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general budgetary purposes.

Orders for Reliance Industries

India-based petrochemical and retail conglomerate Reliance Industries’ new $1 billion 4 1/8% notes due Jan. 28, 2025 that priced at 98.998 drew a final order book of $4.5 billion from 272 accounts, a market source said.

The notes came to the market late on Wednesday to yield Treasuries plus 240 bps, following talk in the 165 bps area.

Barclays, Citigroup, Deutsche Bank, JPMorgan and Morgan Stanley were the active bookrunners for the Rule 144A and Regulation S deal. ANZ, BNP Paribas, Credit Agricole CIB and RBS were the passive bookrunners.

Low coupon for Reliance

Reliance Industries’ new deal was the first from the oil and gas sector in Asia, excluding Japan, since 2014, the company said in a media release. And the deal came in with the lowest coupon ever achieved in the region for a 10-year issue of $1 billion or more of notes.

About 31% of the notes went to Asia, 25% to Europe and 44% to the United States. Fund managers picked up 62%, sovereign wealth funds 7%, insurance companies and pension funds 18% and banks and private banks 13%.

“Had accounts topping up at the open, driving bonds up before settling,” a trader said. “Same story post-London, with under-allocated Middle Eastern accounts adding.”

Baosteel final book

The final book for China-based Baosteel Resources International Co. Ltd.’s new $500 million 3 7/8% notes due Jan. 28, 2020 was more than $4 billion from 290 accounts, a market source said.

The state-owned iron and steel company priced the notes on Wednesday at 99.488 to yield 3.989% via Commonwealth Bank of Australia and National Australia Bank Ltd. in a Regulation S deal.

About 80% of the orders came from Asia and 20% from Europe, with fund managers picking up 58%, insurers and sovereigns 19%, private banks 15% and banks 8%.

“The new Baosteel five-year priced cheap,” a trader said, noting that the bonds opened strongly and traded up before closing 15 bps tighter.

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