MAF sells notes; EM buying ‘relentless’; Lat-Am spreads tighten; Tengizchevroil eyes deal

By Christine Van Dusen

Atlanta, July 11 – Dubai’s Majid Al Futtaim Holding LLC sold notes on a strong day for emerging markets bonds, with “relentless” buying and tighter spreads seen after Friday’s surprisingly good payrolls data from the United States.

“Relentless – that’s the word to use when asked to summarize the market. Relentless buying,” a trader said. “And if a bond looks squeezed, there’s even more focused relentlessness as shorts try every avenue to get bonds back.”

Most Latin American names moved higher and tighter on light volumes, a New York-based trader said.

Brazil’s five-year credit default swaps spreads closed at 304 basis points from 308 bps after trading as tight as 300 bps earlier in the day, he said. Mexico’s moved to 143 bps from 145 bps.

“Cash prices move higher as spread-tightening helps to offset weakness in United States Treasuries,” he said. “Lat-Am high yield is also firmer on the day, with both Venezuela and Argentina higher.”

Venezuela’s 2027s finished up at 49.50 from 48.75, while PDVSA’s 2017s closed at 72.50 from 72.25. Argentina’s Bonar 2024s were unchanged at 116.50, and the 2026s were up at 108.25 from 107.875.

“Flows very light today, as has been the case on summer Mondays, with two-way inquiries,” he said.

From the Middle East and Africa, South Africa outperformed on Monday, putting in a “stunning day,” a trader said.

Indeed, South Africa-based Eskom Holdings SOC Ltd.’s 2023s and 2025s were 28 bps tighter on the day.

“The favorable macro backdrop remains in place following a strong rebound in nonfarm payrolls on Friday,” a London-based analyst said. “We are looking forward to a fairly busy week as many are coming back from the Eid holidays and we have a heavy data schedule towards the end of the week.”

Issuance could arise

This time period, after Ramadan and during the summer, “also provides a short window for new primary market activity,” the trader said.

He pointed to possible issues during the second half of this year from the Investment Corp. of Dubai, Emaar Properties, Burgan Bank, Kuwait and Saudi Arabia.

“Given Ramadan is behind us and European holidays are a few weeks away we have a small window ... to beg issuers to print now rather than after the summer,” a trader said. “Knowing all the wrangling over documentation, I’m not sure we’ll see results.”

Middle East in focus

Overall, spreads for Middle Eastern bonds closed between 3 bps and 10 bps tighter, a trader said, and names from Qatar were particularly strong.

“Oman’s 2026s pushed up to reach, at one point, 101.75 before fading as the day went on,” he said. “They closed at 101¼ bid, 101½ offered.”

The recent issue of 3¾% notes due 2026 from Qatar’s Oordeoo QSC closed 24 bps tighter from launch, with the cash price hitting the mid-to-high-102s, he said.

“Even a recent laggard Lebanon has come back to life,” he said. “Summer liquidity is in full force on many bonds. Mis-pricings are very painful indeed. Solid demand across the board.”

MAF prices tap

Dubai’s MAF priced a $300 million tap of its 4¾% notes due May 7, 2024 at 105.322 to yield 3.95%, a market source said.

The original $500 million issue priced in April of 2014 at 99.835 to yield 4.771%, or mid-swaps plus 195 bps, via Barclays, Credit Agricole, Citigroup, Emirates NBD, HSBC and Standard Chartered Bank.

Other details were not immediately available on Monday.

The company is a Dubai-based conglomerate.

Tengizchevroil sets roadshow

Kazakhstan’s Tengizchevroil LLP will set out on Tuesday for a roadshow to market a possible issue of dollar-denominated notes, a market source said.

The roadshow for the Regulation S deal will end on July 19.

The deal is expected to total up to $1 billion.

Other details were not immediately available on Monday.

Tengizchevroil explores and develops super-giant Tengiz oilfield in Atyrau region.

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