Issuance from Kexim, Franshion; oil creates more volatility; NBAD, IDB advance deals

By Christine Van Dusen

Atlanta, Feb. 2 – The Export-Import Bank of Korea (Kexim) and China’s Franshion Brilliant Ltd. sold notes on a volatile Tuesday for emerging markets assets, which continued to be dragged up and down by the price of oil.

“Oil is clearly back at center stage, leading all assets,” a trader said. “Maybe some stability will offer relief to the broader market, but a continued sell-off will be cause for concern, especially in the EM realm.”

Brazil’s five-year credit default swaps closed at 493 basis points from 478 bps, while Mexico’s moved to 206 bps from 197 bps, a trader said.

“Cash prices were initially unchanged, as United States Treasuries kept the market firm, but spread widening became too much, and by mid-afternoon, dollar prices were well-offered across the spectrum,” he said.

Still, high-yield names from the region managed to finish “surprisingly” unchanged, he said, “despite the risk-off sentiment.”

Venezuela’s 2027s were unchanged at 36, while PDVSA’s 2017s closed at 40.25 from 40.50.

“Volatility was the key theme, as bonds opened lower, rallied in the late morning and then sold off again in the afternoon,” another trader said.

Cash bonds from Mexico, Brazil and Peru traded wider by as much as 10 bps to 30 bps, he said. Brazil-based Petroleo Brasileiro SA was down too, though it outperformed Vale SA and benchmark Brazilian banks.

“With equities down 300 points and the 10-year trading near its 12-month tights, Tuesday was not a good day to be adding risk,” he said. “Corporates were well-offered, with only idiosyncratic situations gaining.”

Bahrain, SECO suffer

Bahrain and Saudi Electricity Co. were among the issuers hardest-hit by oil prices on Tuesday, a London-based trader said.

Egypt and Morocco were the outperformers on “another tricky day, all told,” he said.

“The lack of sell-side and buy-side players in January and the subsequent volatility has killed off most desire to take a constructive look at this space,” he said. “We have a short-dated bond like Ghana 2017 trading in the teens, despite the World Bank and IMF assistance and guidance.”

In other news from the region, market sources were whispering about a possible issue of notes from Ethiopia.

Turk Eximbank trades

The new notes from Turkey’s Turkiye Ihracat Kredi Bankasi AS (Turk Eximbank) – $500 million 5 3/8% notes due 2021 that priced at 99.568 to yield Treasuries plus 411.5 bps – were active in trading on Tuesday.

The bonds opened at about 99¾ bid, par offered and were spotted later Tuesday morning at 99 7/8 bid, 100 1/8 offered. The high trade was 100.35 during the early European session, a trader said.

Citigroup, HSBC, ING, Mizuho Securities, MUFG Securities and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

The deal’s pricing represents a premium of 120 bps over the Turkey curve, a strategist said.

Turkey in focus

Other Turkish banks traded slightly wider on the Turk Eximbank news, a trader said, with state banks moving out as much as 10 bps and private banks 3 bps.

“But overall there doesn’t seem to be much risk sitting in the Street,” he said. “Corporates trade well, as the lack of supply is supportive of technicals.”

Meanwhile, Turkey’s president continued his push for a new constitution and the governing party outlined a six-month roadmap for a related panel, he said.

“President Erdogan said that there is enough support by the parliament and public to change the current charter in a referendum,” he said.

Cash volumes for Turkey were “subdued, with liquidity also falling away from last week’s levels,” another trader said.

Kexim issues notes

In its new deal, Kexim priced $400 million 2 1/8% green notes due Feb. 11, 2021 (Aa2/AA-/AA-) at 99.745 to yield 2.179%, or Treasuries plus 87.5 bps, according to a company announcement.

The notes were talked at a spread in the 105-bps area.

BofA Merrill Lynch and Credit Agricole CIB were the bookrunners for the Securities and Exchange Commission-registered issue.

The proceeds will be used to fund projects that “promote the transition to low-carbon and climate resilient growth,” according to a company filing.

The projects could include those that foster renewable energy, reduce carbon emissions, promote energy efficiency and encourage environmentally friendly industries and technologies.

Kexim said the bonds were nearly three times oversubscribed, attracting $1.1 billion of orders from 64 accounts. Asian buyers were allocated 48%, European accounts 35% and U.S. investors the remaining 17%. Conventional asset managers took 40% of the deal, insurance companies 30%, banks 20% and central banks 10%.

Franshion prices add-on

Also on Tuesday, China’s Franshion priced a $150 million add-on to its existing 6% perpetual notes (Ba2) at par, according to a company filing.

Standard Chartered Bank was the bookrunner for the Regulation S deal.

The original $350 million issue also priced at par.

The proceeds will be used to refinance debt, working capital and for other general corporate purposes.

Franshion Brilliant is a subsidiary of Franshion Properties (China) Ltd., which is a subsidiary of China-based China Jinmao Holdings Group Ltd.

China Jinmao is a Hong Kong-based investment holding company that invests in and develops real estate in mainland China.

Roadshow for NBAD

National Bank of Abu Dhabi PJSC will hold a roadshow on Feb. 8 and Feb. 15 for a possible issue of notes, a market source said.

BofA Merrill Lynch, Credit Agricole CIB, Citigroup, HSBC, MUFG Securities and National Bank of Abu Dhabi are arranging the marketing trip.

The meetings will begin in Europe and move to Asia.

Other details were not immediately available on Tuesday.

IDB seeks issuance

Saudi Arabia-based Islamic Development Bank is looking to issue dollar-denominated and benchmark-sized Islamic bonds during the first quarter of this year, a market source said.

Boubyan Bank, CIMB, Commerzbank, Emirates NBD, Gulf International Bank, JPMorgan, Natixis Securities and Standard Chartered Bank are the bookrunners for the deal.

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

© 2015 Prospect News.
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