Russian credit default swap spreads widen; Entel dips; Lebanon, Kipco bonds rise

By Christine Van Dusen

Atlanta, July 21 – Credit default swap spreads for Russia widened about 13 basis points on Monday morning as tensions with Ukraine remained high in the wake of the crash of a Malaysian Airlines flight.

“We are opening slightly weaker this morning,” a London-based analyst said.

The public outcry at the plane crash – which is believed to have been caused by a surface-to-air missile – and Western leaders’ hawkish responses led investors to cover shorts in the Ukraine sovereign, according to Svitlana Rusakova of Dragon Capital.

“This was quite a difficult task, considering how squeezed many bonds remained,” she said.

Looking to Latin America, corporate bonds were mostly quiet on Monday, with the limited action focused primarily on selling, a New York-based trader said.

Bonds from Petroleo Brasileiro SA (Petrobras), an energy company based in Rio de Janeiro, were among the most active during the session.

High-grade bonds from the region were getting some attention, with some better bids, but many names struggled, he said.

The new issue of notes from Chile-based Empresa Nacional de Telecommunicaciones SA (Entel) – 4¾% notes due 2026 that priced at 99.763 to yield Treasuries plus 230 bps – was trading below fixed reoffer on Monday, he said.

JPMorgan and Santander are the bookrunners for the Rule 144A and Regulation S deal, the proceeds of which will be used to refinance some debt and for general corporate purposes.

Bonds from Mexico’s Cemex SAB de CV were better off than on Friday but still trading lower, with the 2021s close to 109.5 after trading at 110.85 prior to announcing earnings results.

In other trading on Monday, the 7% notes due 2019 that Dubai’s Jebel Ali Free Zone (Jafza) priced at par to yield Treasuries plus 588.9 bps were seen at 114.75 bid, 115.50 offered, a London-based trader said.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD, National Bank of Abu Dhabi and Standard Chartered were the bookrunners for the Regulation S deal.

Lebanon’s 4¾% notes due 2016 that priced at 99.98 traded Monday at 101.37 bid, 102.37 offered, the trader said.

Blom Bank and Citigroup were the bookrunners for the Regulation S deal.

And Kuwait Projects Co.’s (Kipco) 4.8% notes due 2019 that priced at par moved Monday to 103.62 bid, 104.12 offered, he said.

BNP Paribas, HSBC and JPMorgan were the bookrunners for the Regulation S deal.

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