Montenegro revises guidance; KazAgro releases details on planned issue; Ukraine in focus

By Christine Van Dusen

Atlanta, May 12 - Montenegro revised talk and Kazakhstan's JSC National Managing Holding KazAgro (KazAgro) set the size for its upcoming issue of notes on Monday as investors worried about recent votes in Eastern Ukraine.

The votes indicated overwhelming support of self-rule, but it's unclear whether this will lead to more self-governance among rebels or whether they will look to join Russia, a London-based analyst said.

"All focus this morning is on the referendums in the East of Ukraine," she said. "Already this morning, the Kremlin has stated it 'respects' the show of popular will, despite calling for the referendum to be postponed previously. Overall, the developments are negative, but not a major surprise."

The Ukraine government is likely to say the results are illegal, and tension with the rebels could rise, she said.

"The market has not reacted strongly to the news, opening flat to Friday, although the Kremlin comments did cause a brief sell-off this morning," she said. "Elsewhere, [EM] is quiet."

Against this backdrop, long-dated bonds from Russia remained in demand, according to a report from UFS Investment Co.

"The corporate debt segment demonstrates weaker dynamics," the report said. "The situation in the market will depend on the rhetoric of Europe and the United States towards the referendum held in Ukraine."

Investors on Monday were also keeping an eye out for several economic reports scheduled for release this week, including industrial production and gross domestic product numbers from several emerging markets.

"Combine this with tensions in Ukraine and we could be in for a volatile week," according to a report from Erste Group Research.

Inflation risk

Rising inflation is likely to contribute to the volatility, Erste Group said.

"The risk to the rally in our markets, which has fueled a sharp flattening of government bond yield curves in Central and emerging Europe, will most likely come from rising inflation," the report said. "It will be a difficult act to pull off for central banks if the ongoing economic recovery is accompanied by a sudden uptick in inflation."

Montenegro revises talk

Montenegro revised talk to the high-5% area for its upcoming five-year issue of euro-denominated notes, a market source said.

The notes were initially talked at a minimum of 5½%.

Citigroup, Deutsche Bank and Erste Group are the bookrunners for the Rule 144A and Regulation S deal.

The notes are being offered in conjunction with an exchange and tender offer for Montenegro's existing 2015 and 2016 notes.

Pricing is expected to take place on Tuesday, following Monday's expiration of the tender and exchange.

KazAgro sets size

Kazakhstan-based agricultural company KazAgro set the size at a maximum of €600 million for its upcoming issue of notes, a market source said.

HSBC and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

A roadshow began Monday.

Maoye to issue notes

China-based department store Maoye International is looking to issue dollar-denominated notes, according to a company filing.

Citigroup, CLSA, Deutsche Bank and Morgan Stanley are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to refinance indebtedness and for general corporate purposes.

Jingrui shelves deal

In other news, China-based property developer Jingrui Holdings Ltd. postponed its planned issue of dollar-denominated notes due in five years due to insufficient interest from offshore investors, a market source said.

The notes were talked at a yield in the 13 5/8% area.

Haitong International and UBS were the joint global coordinators, joint bookrunners and joint lead managers. HSBC was also a joint bookrunner and joint lead manager for the Regulation S offering.

Proceeds from the notes were to be used to refinance existing debt and to fund new and existing property projects.

Country Garden postpones

China's Country Garden Holdings Co. Ltd. also has postponed a planned issue of notes with bookrunners Goldman Sachs, JPMorgan, Bank of China International and HSBC, a market source said.

The proceeds from the Rule 144A and Regulation S deal were to be used to refinance the company's 2017 notes and for other existing indebtedness, as well as for general corporate purposes.

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

© 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.