‘Upbeat session’ for EM assets; Lat-Am tightens; demand for Qtel; Angola sets roadshow

By Christine Van Dusen

Atlanta, Oct. 22 – Emerging markets assets saw spreads tighten on Thursday, with Latin American cash prices rising and Romania’s new 10-year bonds seeing solid volume, as the larger markets ended higher on better economic data.

“Upbeat session,” a New York-based trader said.

Though volumes were lower than usual on Thursday morning, the tone remained firm for Latin American assets, and sellers emerged for some harder-to-source credits and names with stretched valuations, another trader said.

“On the other side, there are still buyers keeping everything pretty firm and tidy,” he said. “Also moving some credits around are third-quarter results.”

Inquiries for Brazil-based Petroleo Brasileiro SA were lower, he said, and names like Braskem SA and Gerdau SA saw very little movement.

Into the end of the day, Brazil managed to outperform, with its five-year credit default swaps spreads closing at 461 basis points from 478 bps, while Mexico’s CDS moved to 153 bps from 157 bps.

“Cash prices move higher, but we do have some trouble adjusting to swings in the Treasury market, as rate volume picked up for the first time in weeks today,” he said.

Against this backdrop, the new two-tranche issue of €2 billion notes due in 2025 and 2035 that Romania priced on Wednesday received some attention in trading on Thursday.

The €1.25 billion 2¾% notes due in 2025 that priced at 99.183 to yield 2.845%, or mid-swaps plus 190 bps, were spotted at 99.65 on Thursday morning, a trader said.

“Good volume going through,” he said.

The deal also included €750 million 3 7/8% notes due in 2035 that priced at 99.248 to yield 3.93%, or mid-swaps plus 245 bps.

Citigroup, HSBC, RBI and Unicredit were the bookrunners for the Rule 144A and Regulation S deal.

Middle East in focus

From the Middle East, Qatar-based Qtel International’s 4¾% 2021s were trading on Thursday morning at 111 3/8, about 25 bps tighter, a trader said.

“Early morning demand from Asia on senior five-year banks and Qtel sees those names nicely bid,” he said.

Saudi Electricity Co. “felt offered” on Thursday while five-year credit default swaps spreads for Saudi Arabia moved wider to trade in the 130 bps to 135 bps area, he said.

“Perpetuals, overall, have had better demand this week,” he said. “It’s month-end next Friday, and typically towards the end of the year can see some local accounts sell down some paper.”

Ukraine may see upgrade

In news from Ukraine, Fitch Ratings announced it would upgrade the sovereign’s debt rating once the bond exchange is deemed successful. Standard & Poor’s has raised Ukraine’s rating to B- with a stable outlook.

The ratings agency “sees the risk of another default in the next two to three years as diminished due to commitment reforms in the IMF program,” another trader said.

Namibia gives guidance

Also on Thursday, Namibia set talk in the 5¾% area for a dollar-denominated issue of 10-year notes, a market source said.

Barclays Capital, JPMorgan and Standard Bank are the bookrunners for the Rule 144A and Regulation S deal.

Eco-City sets talk

Tianjin Eco-City Investment and Development Co., Ltd. set talk in the 4.7% area for a renminbi-denominated issue of benchmark-sized notes due in three years, a market source said.

Bank of China and Bank of China (Hong Kong) are the bookrunners for the Regulation S deal.

The proceeds will be used for operational working capital and general corporate purposes.

Tianjin Eco-City Investment and Development is a limited liability company indirectly owned by China’s Ministry of Finance.

Angola sets roadshow

And Angola will set out on Oct. 26 for a roadshow to market a debut issue of dollar-denominated and benchmark-sized notes, a market source said.

Deutsche Bank, Goldman Sachs and ICBC International are the bookrunners for the Rule 144A and Regulation S deal.

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