China Development Bank prices bonds; oil dips, equities rise and lift EM; Ooredoo sees activity

By Christine Van Dusen

Atlanta, June 16 – China Development Bank Corp. sold notes during a challenging session for emerging markets assets, which started off with some softness on Thursday morning but strengthened after a midday reversal in the equity market.

Equities and crude oil parted ways during the day, with oil rolling over while equities moved higher, a trader said.

“This caused a lot of confusion in the EM credit space, but the market chose to focus on the positive tone in risk sentiment and bid up cash prices and tighten spreads,” he said.

Brazil’s five-year credit default swaps closed Thursday at 351 basis points, in from 354 bps, while Mexico’s moved lower to 176 bps from 180 bps, a New York-based trader said.

“Cash prices were mostly firm, aside from a small window when equities traded at intraday lows,” he said. “Latin American high yield finishes unchanged to higher on the session, with lower oil barely fazing Venezuela.”

Indeed, the sovereign’s 2027s were unchanged at 43.75 and PDVSA’s 2017s stuck to the 67.5 level.

“Argentina has its Bonar 2024s essentially unchanged at 112.625 and its 2026s up at 106.50 from 106 yesterday,” he said. “Client flows were on the lighter side today, with the majority of volumes in the Street and very gappy in nature.”

From Asia, China-based Baidu Inc. underperformed in trading on Thursday morning, as did Alibaba, which saw its 2024 notes trade lower, a trader said.

Tencent Holdings’ 2025s widened about 6b bps, he added, while sovereign bonds from Indonesia moved 1 point higher, with the long end outperforming.

“Risk sentiment continued to deteriorate in Asian credits as the U.S. Treasury rally lured out outright sellers and real-money accounts are still adjusting to these yield levels,” he said.

Ooredoo trades up

The new issue of notes from Qatar’s Ooredoo QSC – $500 million of 3¾% notes due 2026 that priced Wednesday at 98.964 to yield mid-swaps plus 240 bps – traded Thursday at 99.125 bid, 99.25 offered.

“Few sellers out of the gates at 99.10 before some decent Asian demand took her right up to 99.55,” a trader said. “It has since faded as the day wore on, last down at 99 but closing at 99.10 bid, 99.25 offered.”

The notes were talked at a spread of 240 bps to 245 bps.

HSBC was the global coordinator and ANZ, BofA Merrill Lynch, Citigroup, DBS Bank, HSBC, Mizuho Securities, MUFG Securities and QNB Capital were the joint lead managers and joint bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Interest in Abu Dhabi, Qatar

In other trading from the Middle East, there were “patches of activity with what felt like plenty

of interest in liquid Abu Dhabi and Qatar benchmarks,” a trader said.

“They started off well, then paused, then went very well-bid and end up fading a little,” he said. “Net-net Qatar’s 2026 closes unchanged in spread and the 2021 is still seeing net adding, last trading Treasuries plus 145 bps.”

Finansbank deal concludes

In other news, the National Bank of Greece completed the sale of its 99.81% state in Turkey’s Turkiye Finans Katilim Bankasi AS (Finansbank) to Qatar National Bank.

Over the year, Finansbank’s spreads have “substantially tightened, outperforming other Turkish banking and QNB bonds,” the strategist said. “From current levels, we expect some further room for tightening, driven by an increased investor base.”

Though the deal risk has disappeared, “Finansbank is likely to remain an independent operating unit,” he said. “As a result, Finansbank bonds should trade with a premium above the QNB curve.”

It’s possible Finansbank will approach debt markets, he said, given that its 5½% notes due 2016 matured earlier this year.

Chine Development sells notes

In its new deal, China Development Bank priced a $1 billion issue of 1 5/8% notes due June 22, 2019 at 99.796 to yield Treasuries plus 90 basis points, matching talk, a market source said.

Bank of China, Barclays, BNP Paribas, BOCOM HK Branch, China Construction Bank (Asia), HSBC, KGI Asia Ltd., Mizuho Securities, MUFG and Standard Chartered Bank were the bookrunners for the Regulation S deal.

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

The lender is based in Beijing.

© 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.