Investors watch ECB; issuance from Country Garden; Turkey tightens; Pemex tranches trade

By Christine Van Dusen

Atlanta, Dec. 7 – China’s Country Garden Holdings Co. Ltd. sold notes on Wednesday as investors watched the meeting of the European Central Bank, which reviewed its bond-buying program.

“Most economists predict the two-day session will culminate in a decision to prolong asset purchases after March at the current monthly pace of €80 billion euros for about six months,” according to a report from Schildershoven Finance BV.

Investors are not expecting action on interest rates, the report said. The risk now “is of a failure to meet market expectations.”

For bonds, the ECB’s decision “may be as serious as the possible Federal Reserve decision next week,” the report said.

Looking to Turkey, bonds moved tighter on Wednesday, with the long end narrowing 15 basis points and moving up 1½ points, a London-based trader said.

Investors were also keeping an eye on Mexico’s Petroleos Mexicanos SAB de CV (Pemex), which – after auctioning its first blocks to international oil companies – on Tuesday priced a three-tranche issue of $5.5 billion notes due in five and 10 years.

The $1.5 billion fixed-rate notes due in five years priced at 5½%, following talk in the low-6% area. They were spotted on Wednesday at 102½ bid, 103.15 offered, a trader said.

The $1 billion five-year floating-rate notes priced at par to yield Libor plus 365 bps.

The $3 billion 10-year fixed-rate notes priced at 6 5/8% after talk in the low-7% area. Those notes traded Wednesday at 105 bid, 105.65 offered.

BofA Merrill Lynch, Citigroup, JPMorgan, Mizuho Securities and Morgan Stanley were the bookrunners for the deal, which was initially expected to total about $4 billion.

“The Mexican oil giant is suffering from a reduction in its oil reserves and its high lifting costs,” said Cedric Rimaud, director of emerging markets research at Gimme Credit, an independent research service on corporate bonds. “Its infrastructure needs to be modernized and capital expenditures will remain elevated for some time, putting pressure on the credit metrics.

Azerbaijan secures loan

In other news, Asian Development Bank extended a $500 million loan to Azerbaijan to help the energy-heavy sovereign weather the storm of oil prices. The loan will allow Azerbaijan to maintain social spending, create jobs and diversify its economy, Schildershoven said.

“The loan from the Asian Development Bank should help Azerbaijan to keep its monetary reserves and, as a result, its credit strength,” the report said. “However, we do not expect any major market reaction to the news.”

Country Garden prints bonds

In its new deal, China’s Country Garden priced $350 million 5 5/8% notes due Dec. 15, 2026 at par to yield 5 5/8%, according to a company filing.

The notes were marketed in November and talked at a yield in the 5 5/8% area, before being postponed due to market conditions.

BNP Goldman Sachs, JPMorgan were the joint global coordinators and BNP Paribas, BOC International, Goldman Sachs, HSBC, Huarong Financial and JPMorgan were the joint lead managers and bookrunners for the Regulation S deal.

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

Country Garden is a Foshan, China-based real estate developer focused on large-scale residential communities.

Chinese bank plans offering

Agricultural Bank of China Ltd. will issue $500 million 2 3/8% notes due 2019, according to a company filing.

ABC International, Agricultural Bank of China, Bank of China, Bocom HK Branch, CEB International, China Merchants Securities, Commonwealth Bank of Australia, China Securities International, China Galaxy International, Dongxing Securities (Hong Kong), Guotai Junan International, Morgan Stanley, Shanghai Pudong Development Bank and Standard Chartered Bank are the bookrunners for the Regulation S deal.

The issuer is based in Hong Kong.

IDB sells notes

On Monday, Islamic Development Bank – via IDB Trust Services Ltd. – pried $1.25 billion 2.263% notes due Dec. 7, 2021 at par to yield 2.263%, according to a company filing.

Boubyan Bank, Credit Agricole CIB, GIB Capital, JPMorgan, Mizuho International, National Bank of Abu Dhabi, Natixis, RHB Investment Bank and Standard Chartered Bank were the bookrunners for the deal.

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

© 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.