Emirates Islamic Bank issues notes; Lat-Am spreads widen; Turkey trading weaker; Kuwait eyed

By Christine Van Dusen

Atlanta, Aug. 30 – Emirates Islamic Bank sold notes on a Tuesday that saw weakness in oil and equities, which hurt sentiment for emerging markets assets.

Brazil’s five-year credit default swaps spreads closed at 259 basis points from 257 bps as the impeachment trial continued for President Dilma Rousseff. And Mexico’s credit default swaps spreads moved to 138 bps from 136 bps, a New York-based trader said.

“Cash prices are a bit on the soft side, on continued light volumes as Treasury weakness and spread widening have markets adjusting levels a bit lower,” he said. “Lat-Am high yield finishes mostly unchanged on the day.”

Venezuela’s 2027s closed unchanged at 50.25, while PDVSA’s 2017s finished unchanged at 75.25, he said.

Argentina was also unchanged, with its Bonar 2024s at 117.60 and its 2026s at 112.

“Flows continue to be very light, but this may pick up with month-end tomorrow and the release of ADP data,” he said.

Market-watchers continue to eye rates, a London-based analyst said.

“With little else happening, U.S. rates remain the key driver for EM this week,” the analyst said. “Therefore, all eyes on Friday once more, when nonfarm payrolls data will be released.”

Turkey remained on radar screens, as the sovereign continued military operations in Northern Syria.

“Turkish-backed forces moved further into Syria yesterday and drew a rebuke from the U.S.,” the analyst said.

And this weekend, Turkish President Erdogan will meet with President Obama on the sidelines of the G-20 Summit in China.

“Turkey is trading weaker from Friday’s close as the Street leans on the curve and slowly drops offers, but 10-year cash has not pushed through 300 z-spread yet, where I would expect some support,” a trader said. “The curve continues to steepen as the U.S. Treasury curve flattens.”

Turkey CDS ticks down

Credit default swaps spreads for Turkey continued to “tick down slowly,” the analyst said.

Banks and corporates, meanwhile, “feel resilient,” he said, noting some better buying.

“Corporates are still solid, with not much paper around,” he said.

South Africa turmoil continues

In news from South Africa, Finance Minister Gordhan’s future remained unclear, as newspapers reported the official could face charges for graft as soon as this week.

“Last week, President Zuma has reassured his ‘full confidence’ in Gordhan, but stated that he won’t be able to intervene [in] the investigation,” he said.

EIB prices tap

In its new deal, Emirates Islamic Bank priced a $250 million tap of its 3.542% notes due May 31, 2021 at mid-swaps plus 170 bps, a market source said.

Bank ABC, Dubai Islamic Bank, EMCAP and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The notes were talked at a spread in the 180 bps area.

The original $750 million issue priced in May at par to yield mid-swaps plus 220 bps.

Other details were not immediately available on Tuesday.

NBAD gives update

National Bank of Abu Dhabi’s new issue of dollar-denominated and benchmark-sized green bonds will be Regulation S-registered, a market source said.

BofA Merrill Lynch, Bank of Toyko-Mitsubishi, Credit Agricole CIB, Citigroup, HSBC and NBAD are the bookrunners for the deal.

A roadshow for the transaction will end on Sept. 5. The marketing trip will also serve as an opportunity to update investors on the company’s performance for the first half of the year, as well as the expected merger with Abu Dhabi’s First Gulf Bank PJSC.

Kuwait to hold roadshow

Kuwait is planning a roadshow for November to market a dollar-denominated issue of Islamic bonds, a market source said.

The issue is expected to price sometime during the next six months.

Other details were not immediately available on Tuesday.

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