Pemex, Akbank print notes; other Turkish banks to follow; oil, Swiss franc move markets

By Christine Van Dusen

Atlanta, Jan. 15 – Mexico’s Petroleos Mexicanos SAB de CV (Pemex) and Turkey’s Akbank TAS sold notes on a Thursday that saw investors scramble after the Swiss National Bank removed a cap on the franc that was implemented in 2011 to beat back a recession.

The surprising move drove the franc up about 30% against the euro, and, “as a result, Central and emerging Europe credits were very busy, given their links to the Swiss franc,” a London-based trader said.

This didn’t have much impact on other emerging markets, though; the continuing moves in the price of oil was a larger factor there.

Asian bonds were firm for most of the session on Thursday, with high-grade cash bonds unchanged to 3 basis points tighter, another London-based trader said.

“The rally in oil sent the China oil complex 3 bps to 5 bps tighter but had sellers into strength,” he said.

Chinese property companies saw their bonds lower by about 1 point as government officials continued to halt real estate sales as part of a corruption investigation.

Fantasia Holdings, for one, saw its bonds drop 6 points to 8 points, he said. And Kaisa Group’s notes dropped 2 points.

Meanwhile, Indonesia’s 2045s touched a high of 102½ before settling at 102 3/8 bid, 102 5/8 offered.

In its new deal, Mexico’s Pemex – via BBVA, Citigroup, HSBC and Morgan Stanley in a Rule 144A and Regulation S deal – printed $1.5 billion notes due in July of 2020, $1.5 billion due in January of 2026 and $3 billion due in January of 2046, according to a company announcement.

Pemex prints bonds

Pemex’s 2020 notes priced at a spread of Treasuries plus 235 bps while the 2026 notes came at a spread of 280 bps, a market source said. Other pricing details were not immediately available on Thursday.

The deal was the biggest completed in Mexico, according to Pemex, and the 30-year notes carried a historically low coupon.

The notes attracted orders from pension funds, portfolio managers and financial institutions in the United States, Europe, Asia, Mexico and the Middle East.

Abu Dhabi, Qatar fare well

In trading on Thursday, investment-grade names from Abu Dhabi and Qatar traded well while Dubai was a “mixed bag,” he said.

“Bahrain rallied circa 10 bps today, with the long-dated 2044 dollar notes last trading at 93.50,” he said. “Bahrain’s 2022s and 2023s are still also very popular, and on the month now they are 65 bps tighter.”

Abu Dhabi-based Etisalat’s euro-denominated 2021s tightened 15 bps, he said, and Abu Dhabi Commercial Bank was another outperformer.

Dubai bank bonds dip

The new Islamic notes from Dubai Islamic Bank PJSC – $1 billion 6¾% perpetual notes that priced at par to yield mid-swaps plus 512.6 bps – have dropped a point since launch, he said.

HSBC and Standard Chartered Bank were the joint structuring banks, and Al Hilal Bank, Dubai Islamic Bank, Emirates NBD Capital, HSBC, National Bank of Abu Dhabi, Noor Bank, Sharjah Islamic Bank and Standard Chartered Bank were the joint lead managers for the Regulation S sukuk.

“That dragged the old Dubai Islamic Bank down as well, closing at 100.12 bid, 100.62 offered,” the trader said.

LatAm seesaws

Latin American corporate bonds had a challenging session on Thursday, with bonds from Brazil-based Petroleo Brasileiro SA “see-sawing,” a New York-based trader said.

Spreads for bonds from Brazil’s Vale SA widened, and Corporacion Nacional del Cobre de Chile (Codelco) also moved out a bit, though less than on Wednesday, he said.

And notes from Brazil-based Odebrecht SA were still weak, with the 2025s and 2029s trading at new lows, he said.

Pacific Rubiales struggles

Looking to Toronto-based and Colombia-focused Pacific Rubiales Energy Corp., the company’s bonds whipped back and forth with oil prices, he said.

The company is grappling with investor concern that the declining price of oil could cause Pacific Rubiales to break a rule – specifying its debt not exceed 3½ times its 12-month trailing EBITDA – and hamstring its efforts to boost production.

Russian CDS tightens

From Russia, credit default swaps spreads were 20 bps tighter on Thursday morning, boosted by Wednesday’ rally in oil, a London-based analyst said.

“Focusing on the Ukraine conflict, it appears there will now be a contact meeting tomorrow in Minsk, but considering that the heads of state meeting was cancelled, our impression is that real progress on a peace deal remains unlikely for now,” he said.

Turkey in focus

From Turkey, credit default swaps spreads narrowed by 5 bps on Thursday morning, the analyst said.

“We generally saw better sellers yesterday in the Turkish credit space, but the region remains firm overall,” he said.

The move in U.S. Treasuries helped Turkey’s spreads, with banks moving as much as 8 bps tighter, he said.

“The time seems ripe for new issuance from Turkish banks and corporates, given where rates and spreads are,” he said.

Akbank sells notes

Turkey’s Akbank seemed to hear this advice – the company on Thursday sold $500 million 4% notes due Jan. 24, 2020 at 99.664 to yield 4.075%, or mid-swaps plus 270 bps, a market source said.

The notes were talked at a spread in the 287.5 bps area.

Barclays, Citigroup, Goldman Sachs, ING, Mizuho Securities and Standard Chartered Bank were the bookrunners for the deal.

The deal was not “a major surprise, given their upcoming maturity in July this year,” a trader said. “The Akbank curve is very technical, with few bonds around, so existing bonds trade very tight, particularly the 2018s and 2022s.”

Roadshows ahead

Turkey’s Sekerbank TAS has mandated Commerzbank and UniCredit as bookrunners for a euro-denominated issue of notes that will be marketed during a roadshow, a market source said.

The roadshow will start on Jan. 19. A Regulation S-registered issue of notes is expected to follow.

And Turkey’s Turkiye Vakiflar Bankasi TAO (Vakifbank) will depart on Jan. 19 for a roadshow to market a dollar-denominated offering of notes, a market source said.

BofA Merrill Lynch and Standard Chartered Bank are the joint structuring advisers and joint lead managers. Citigroup, Deutsche Bank, Goldman Sachs and HSBC are the joint lead managers for the Rule 144A and Regulation S deal.

Philippines curve climbs

In other trading from Asia, the Republic of the Philippines’ curve was a quarter-point higher, with the new 2040s up a half-point to 104½, a trader said.

The sovereign’s $1.5 billion 4.2% notes due 2024 priced at par via Deutsche Bank, HSBC and Standard Chartered Bank in a Securities and Exchange Commission-registered transaction.

The joint lead managers and bookrunners are ANZ Securities, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and Standard Chartered Bank.

The proceeds will be used to fund a tender offer and for expenses incurred in that transaction, as well as for general governmental purposes.

China Huarong notes active

The new five-year and 10-year notes from China Huarong Asset Management Co. Ltd. were outperformers on Thursday, a trader said.

The company priced $1.2 billion notes due 2020 at Treasuries plus 310 bps, following talk of 320 bps, and $1.4 billion notes due 2025 at Treasuries plus 360 bps, following talk of a spread of 370 bps.

“The five-year and 10-year traded 8 bps to 10 bps tighter,” he said.

The deal also included $600 million three-year notes that priced at Treasuries plus 270 bps after talk was set at 280 bps.

Credit Suisse, Standard Chartered Bank and Wing Lung Bank were the joint global coordinators. ABC International, BOC International, Bocom International, CCB International, China Merchants Securities, Citigroup, Credit Suisse, DBS Bank, Deutsche Bank, HSBC, ICBC, Jefferies, Morgan Stanley, Standard Chartered Bank and Wing Lung Bank were the joint bookrunners and joint lead managers for the Regulation S deal.

Woori Bank gets attention

South Korea-based Woori Bank’s new $350 million 2 5/8% notes due July 22, 2020 saw some activity on Thursday, a trader said.

The notes priced Wednesday at 99.649 to yield 2.694%, or Treasuries plus 135 bps, via Barclays, Commerzbank, Deutsche Bank, HSBC, Nomura and Standard Chartered Bank in a Regulation S deal.

“Bonds traded firm,” he said.

Apexindo deal advances

In deal-related news, Indonesia’s Apexindo Pratama Duta Tbk. has mandated DBS, HSBC and Standard Chartered Bank as bookrunners for a Singapore dollar-denominated offering of notes, a market source said.

No other details were immediately available on Thursday.

The company previously mandated JPMorgan, Standard Chartered Bank, ANZ Banking Group and Raiffeisen Bank International to lead a roadshow for a five-year dollar-denominated offering of notes. The deal was shelved in October.

Tunisia sets roadshow

Tunisia will set out on Friday for a roadshow to market a dollar-denominated offering of notes, a market source said.

The sovereign previously announced plans for $750 million in issuance.

Citigroup, JPMorgan and Natixis Securities are the joint lead managers for the marketing trip, which will be held in Europe and the United States.

A Rule 144A and Regulation S deal is expected to follow.

Lebanon to issue dollar bonds

In other deal-related news, Lebanon is looking to hire banks to lead a dollar-denominated offering of bonds, a market source said.

No other details were immediately available on Thursday.

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