Israel, Fibria sell notes; Turkey underperforms; Argentina taps banks; Egypt readies deal

By Christine Van Dusen

Atlanta, Jan. 11 – Israel and Brazil’s Fibria Celulose SA sold notes on Wednesday as investors kept an eye on the selection of President-elect Donald Trump’s cabinet amid concerns about ties to Russia.

“While President-elect Trump has vowed to change course on the US-Russian relations, he will undeniably face some resistance by the political establishment, reflected by a new legislation that demanded further sanctions on Russia introduced by Republican and Democratic senators,” a London-based analyst said. “Markets are certainly watching closely.”

In trading, Turkey continued to underperform on Wednesday amid foreign currency liquidity concerns and the central bank’s decision to release $1.5 billion into the financial system.

The bank also limited lenders’ ability to borrow in the interbank money market.

“The move provided the lira with a brief respite before continuing its freefall,” the analyst said. “Calls for meaningful rate hikes by market participants have increased, but the central bank remains in a dilemma as government officials have repeated their calls to avoid raising rates.”

Also from Turkey, the parliament is debating amendments to its constitution.

All of this is “causing Turkish credit to underperform the rest of the [emerging markets] space once more, with Turkey sovereign credit default swaps 7 basis points to 8 bps wider and cash circa 8 bps wider,” he said. “Other markets are rather well-behaved.”

Notes from Poland were trading about 3 bps tighter on Wednesday after the central bank decided to keep its reference rate unchanged.

In deal-related news, Argentina picked banks for its upcoming issue of up to $10 billion of notes, a market source said.

Argentina mandates bookrunners

Argentina has picked Santander, BBVA, Citibank, Deutsche Bank, HSBC and JPMorgan as bookrunners for an upcoming issue of dollar-denominated notes, a market source said.

The deal, which could total between $5 billion and $10 billion, is expected to come to the market before Jan. 20.

And Egypt set the size at $2 billion to $2.5 billion for an issue of eurobonds that is likely to come to the market in February, a market source said.

The sovereign will set out on Jan. 17 for a roadshow.

Egypt was previously expected to issue notes before the end of 2016, but a deal never materialized.

Israel sells notes

In its new deal, Israel priced a €2.25 billion issue of notes due in Jan. 18 of 2027 and 2037, according to an informed market source.

The €1.5 billion 1½% notes due in 10 years priced at 99.522 to yield mid-swaps plus 87 bps after talk in the 95 bps area.

The €750 million 2 3/8% notes due in 20 years priced at 98.732 to yield mid-swaps plus 125 bps, following talk in the 130 bps area.

BofA Merrill Lynch, Barclays Bank and Citigroup were the bookrunners for the Regulation S deal.

Fibria prices bonds

Also on Wednesday, Brazil’s Fibria Celulose – via Fibria Overseas Finance Ltd. – priced $700 million 5½% notes due Jan. 17, 2027 at 98.491 to yield 5.7%, a market source said.

BNP Paribas, BofA Merrill Lynch, Citigroup, HSBC and JPMorgan were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for eligible green projects.

Fibria is a Sao Paulo-based pulp and paper company.

Issuance from China Jinmao

On Tuesday, China Jinmao Holdings Group Ltd. – via Franshion Brilliant Ltd. – priced $500 million 5¾% perpetual notes at 99.523, according to a company filing.

Goldman Sachs and HSBC were the bookrunners for the Regulation S deal.

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

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

Bharat prints notes

Late on Tuesday, India’s Bharat Petroleum Corp. Ltd. – via indirect subsidiary BPRL International Singapore Pte. Ltd. – priced $600 million 4 3/8% notes due Jan. 17, 2027, according to a company announcement.

Citigroup and Standard Chartered Bank were the joint global coordinators and – with DBS Bank, MUFG and SBI Capital Markets – the joint bookrunners and joint lead managers for the Regulation S deal.

The proceeds will be used for partial repayment of bridge loans.

Other details were not immediately available on Wednesday.

Bharat Petroleum is an oil and gas company based in Mumbai.

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