Cyprus turmoil dominates markets; spreads widen; issuance from 21Vianet, Alicorp, Slovakia

By Christine Van Dusen

Atlanta, March 18 - Bond investors on Monday were distracted by the financial crisis in Cyprus, where a run on the banks - spurred by a tax on deposits that's part of a €10 billion bailout from the European Union - threatened financial collapse for the small sovereign and caused market-watchers to worry the trouble might spread to other countries.

"News flow and comments are dominated by the weekend Cyprus news," said a London-based trader who focuses primarily on the Middle East. "We did see some selling in my world on the back of this, but once again there are enough technical bonds out there to call it a mixed bag."

The Markit iTraxx SovX index spread started Monday at Treasuries plus 175.5 basis points, wider by 5.5 bps. The corporate index spread, at 213 bps over Treasuries on Friday, widened by 1 bp to 214 bps on Monday.

"All focus this morning is on the European Finance Minister's agreement to impose a tax on Cypriot depositors as part of a bailout package," a London-based analyst said. "The market is opening in a firmly risk-off mode, with U.S. Treasuries rallying."

Spreads in the Middle East and North Africa moved out 5 bps to 10 bps, she said.

"We are seeing some selling of International Petroleum Investment Co.'s 2020s and 2022s, wider by 7 bps and 10 bps respectively."

She also noted some local demand for bonds from Emirates airline.

"The Dubai government is 5 bps to 7 bps wider," she said.

Against this backdrop on Monday, China's 21Vianet Group, Peru's Alicorp SAA and Slovakia sold notes.

21Vianet sells notes

In its new deal, China-based Internet data center services provider 21Vianet Group sold RMB 1 billion 7 7/8% notes due March 22, 2016 at 99.803, a market source said.

Barclays, Citic Securities, DBS Bank and Wing Lung Bank were the bookrunners for the Regulation S deal.

The proceeds will be used for data center expansion and for general corporate purposes.

Slovakia prices bonds

Slovakia sold CHF 575 million notes in tranches due 2019 and 2023 (A2/A/A+) via bookrunners BNP Paribas and UBS.

The deal included CHF 400 million 1 3/8% notes due 2019 that priced to yield 1.424%, or mid-swaps plus 75 bps.

The notes were talked at a spread in the 75 bps area.

The second tranche of CHF 175 million 2¼% notes due 2023 priced to yield 2.154%, or mid-swaps plus 100 bps. The notes priced in line with talk, set at the 100 bps area.

Slovakia does deal

And Peruvian consumer goods company Alicorp sold $450 million 3 7/8% notes due March 20, 2023 at 99.836 to yield 3.895%, or Treasuries plus 190 bps.

BofA Merrill Lynch, JPMorgan and BCP Capital were the joint leads for the Rule 144A and Regulation S deal.

The final book was about $4.4 billion from 230 accounts, with 73% from the United States, 19% from Europe, the Middle East and Africa, 6% from Latin America and 2% from Asia.

Asset managers picked up 72%, insurance 8%, pension funds 7%, hedge funds 6%, private banks 6% and banks 1%.

BankMuscat gives guidance

Oman's BankMuscat set initial price talk in the mid-swaps plus 187.5 basis points area for its upcoming issue of about $500 million five-year notes, a market source said.

Citigroup, Credit Agricole CIB, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank are the bookrunners for the Regulation S deal.

BankMuscat is a lender based in Muscat, Oman.

"That should be popular at this level, given the scarcity of paper from Oman," a trader said. "I can see this printing more like 175 bps over."

Minzhong plans roadshow

China Minzhong Food Corp. Ltd. will hold a roadshow starting Tuesday for an issue of Regulation S notes due in 2018, according to a company announcement.

The company recently delayed a marketing trip due to its acquisition of Indofood.

JPMorgan and Deutsche Bank are the bookrunners for the deal.

China Minzhong Food is an integrated vegetable processor based in Putian City, Fujian Province, China.

OSX Brasil plans deal

OSX Brasil SA is planning a $264 million issue of notes due on June 26, 2014 that is expected to price at par, a market source said.

Pareto Securities is the bookrunner for the deal.

The proceeds will be used to fund projects and for other corporate purposes.

OSX Brasil is a Rio de Janeiro-based oil and gas holding company.

SECO taps bookrunners

Saudi Electricity Co. has mandated Deutsche Bank and HSBC as bookrunners for a possible issue of notes that will be marketed during a roadshow, a market source said.

The roadshow will begin Tuesday and take place in the United States and Europe.

A Rule 144A and Regulation S deal is expected to follow.

"Their bonds were not too active but were marked about 10 bps wider," a trader said.

TMK picks leads

Russia's OAO TMK has mandated Citigroup, Deutsche Bank and JPMorgan for its upcoming dollar-denominated issue of notes, a market source said.

A roadshow will begin on Wednesday.

The Rule 144A and Regulation S deal is expected to price in April.

TMK is a steel pipe manufacturer based in Moscow.

Tower Bersama taps banks

Indonesia's PT Tower Bersama Group has mandated ANZ, Citigroup, Credit Agricole, DBS Bank, Mitsubishi UFJ Securities, Morgan Stanley and UBS for a dollar-denominated issue of notes, a market source said.

And China Minmetals Corp. has mandated HSBC, DBS Bank, ICBC (Asia), ABC International and Standard Chartered Bank as bookrunners for a renminbi-denominated issue of notes, a market source said.

A roadshow is expected to begin Tuesday for the Regulation S deal.

Roadshow ahead for Zhong An

China's Zhong An Real Estate Ltd. has mandated BNP Paribas, JPMorgan and UBS for a roadshow starting Tuesday, a market source said.

The marketing trip will be held in Hong Kong and Singapore.

No other details were immediately available on Monday.

Zhong An Real Estate is a Hong Kong-based investment holding company.

Cemex oversubscribed

The final book for Mexico-based building materials supplier and cement producer Cemex SAB de CV's $600 million issue of 5 7/8% notes due March 25, 2019 was $8.2 billion, a market source said.

The deal priced last week at par to yield 5 7/8%, or Treasuries plus 500.2 bps, via BofA Merrill Lynch, Citigroup, HSBC and Santander in a Rule 144A and Regulation S deal.

The proceeds will be used to refinance existing debt and for general corporate purposes.

About 77% of the orders were placed in the United States, 20% in Europe and 3% in Latin America.

Asset managers accounted for 77%, hedge funds 9%, private banks 7% and others 7%.

Kaisa in demand

Also oversubscribed was China-based property developer Kaisa Group Holdings Ltd.'s $550 million issue of 8 7/8% senior notes due 2018, a market source said.

The deal priced at par with Credit Suisse, JPMorgan, HSBC and ICBC in a Rule 144A and Regulation S transaction.

Kaisa attracted $10 billion in orders, with 55% from Asia, 27% from the United States and 18% from Europe.

Fund managers accounted for 76%, private banks 10%, banks 6% and others 8%.

Proceeds will be used to partially refinance the company's 13½% senior notes due 2015, to fund existing and new property projects and for general corporate purposes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.