Cemex, Odebrecht, other Lat-Am corporates suffer during weak session; Kazakhstan in focus

By Christine Van Dusen

Atlanta, Oct. 10 – The new issue of notes from Kazakhstan continued to get attention in trading on an otherwise mostly weaker Friday for emerging markets assets, particularly those from Latin America.

The region’s corporate bonds moved wider with little to no liquidity, a New York-based trader said.

Bonds from Brazil-based Petroleo Brasileiro and Vale SA moved out as much as 8 basis points on Friday before closing wider by 3 bps and 5 bps, respectively, on very light volumes.

Most corporate bonds from Peru traded infrequently, with just metals and mining companies holding in fairly well, he said.

Mexico-based Cemex SAB de CV was “smacked down” another point, trading lower than in the previous down market, he said.

Brazil-based Odebrecht SA was another big underperformer, as was Braskem SA.

But Mexican banks found some support, and petrochemical company bonds – though weak – were not as weak as those from other sectors, he said.

“This slump will continue in the short term and could turn ugly if it lasts well through October,” he said.

Meanwhile, some euro-denominated bonds managed to narrow into the end of the week, a London-based analyst said.

“U.S. Treasuries rallied throughout the week on the weak risk tone, resulting in dollar spreads generally ending the week a little wider in [emerging markets],” a London-based analyst said. “Another clear trend this week was the outperformance of euro bonds, which generally end the week tighter.”

In other news, China’s Energy Earth (Hong Kong) Co. Ltd. canceled its plan to issue renminbi-denominated notes, a market source said.

Barclays was the sole global coordinator for the deal. Barclays and CLSA were the joint bookrunners and joint lead managers for the Regulation S deal.

The company is a subsidiary of Thailand-based energy company Energy Earth Public Co. Ltd.

Kazakhstan bonds get attention

Investors on Friday were once again eyeing the new two-tranche issue of notes from Kazakhstan.

The sovereign this week priced $2.5 billion of notes due Oct. 14, 2024 and 2044, a syndicate source said.

The $1.5 billion 3 7/8% 10-year notes priced at 98.387 to yield 4.073%, or mid-swaps plus 150 bps.

The notes were talked at a spread in the 175 bps area.

The $1 billion 4 7/8% notes due in 2044 priced at 96.324 to yield 5.116%, or mid-swaps plus 200 bps, following talk in the 230 bps area.

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

“The notes are trading circa 15 bps and 10 bps wider, respectively, since issuance,” a trader said.

Greenland launches notes

China’s Greenland Holding Group Co. Ltd. launched a $500 million issue of three-year notes at a spread of 290 bps over Treasuries, a market source said.

No other details were immediately available on Friday.

The company is a real estate development and operation services company based in Shanghai.

Tunisia seeks issuance

Tunisia is looking to print a dollar-denominated issue of notes, a market source said.

The sovereign is currently seeking out bookrunners for the transaction.

No other details were immediately available on Friday.

Bohai Steel oversubscribed

The new issue of RMB 1 billion 6.4% notes due 2017 that China’s Bohai Steel Group Co. Ltd. priced on Thursday at par drew an order book of about RMB 1.9 billion, a market source said.

DBS was the sole global coordinator. Haitong International was a joint bookrunner for the Regulation S deal.

The notes were spotted at 99.97 bid, 100 1/8 offered in trading on Friday.

About 46% of the orders came from Hong Kong, 43% from Singapore and 11% from other regions.

Fund managers picked up 63%, banks 17%, private banks 16% and others 4%.

The steel company is based in Tianjin, China.

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