Issuance from Zhengzhou Yutong Bus; Pacific Rubiales in news again; investors watch FOMC

By Christine Van Dusen

Atlanta, May 20 – China’s Zhengzhou Yutong Bus Co. sold notes on a Wednesday that saw softer trading of Asian bonds and a focus on Pacific Rubiales Energy Corp. as investors watched for the Federal Open Market Committee’s minutes.

A mixed tone in the investment-grade space moved bonds from China 2 basis points to 3 bps tighter, a London-based trader said, and investors continued to show interest in the recent issues from Cnooc Ltd., China Petroleum & Chemical Corp. (Sinopec) and Sinochem Group.

“Financials are also moving tighter,” he said. “On the high-yield front we’re relatively weaker, especially on the China property front, which is 25 cents to 50 cents lower.”

Asian sovereign opened weakly on Wednesday on the overnight move in Treasuries, but buyers emerged, “looking to scoop the pull-back,” he said.

From Latin America, Toronto-based and Colombia-focused Pacific Rubiales was once again in the news, this time after the O’Hara Administration group of Venezuelan investors said they may block a bid from Alfa SAB de CV and Harbour Energy Ltd. by buying more shares in Pacific Rubiales.

The O’Hara group opposes the current takeover bid from Alfa and Harbour.

The company’s curve traded “very thinly” in the Street on Wednesday morning in response, a New York-based trader said, with prices remaining close to Tuesday’s levels.

Later in the session, Pacific Rubiales’ notes moved higher, with the 2023s and 2025s seen at 85, as investors speculated whether the acquisition was going to proceed.

“Triggering both client and Street buying, but liquidity still remains thin,” he said. “Trace volumes are low while the number of trades is plentiful.”

Lat-Am widens

In other trading from Latin America, spreads widened on some assets as U.S. Treasuries moved higher ahead of dovish minutes from the Federal Reserve, another trader said.

“No clear bias from most account bases, but inquiry and activity are quite brisk,” he said.

Chile-based Cencosud SA saw some small buying as its curve moved higher while Brazil-based Petroleo Brasileiro SA was quiet, he said.

Bonds from Brazil-based Odebrecht SA moved higher by 2½ points to 3 points, he said, while other high-grade Brazilian names were quiet.

Argentina rises higher

Argentina saw its bonds climb back again on Wednesday, with the Boden 2015s closing at 99.55 from 99.40 and the Bonar 2024s at 98.75 from 98.40, another trader said.

Meanwhile, PDVSA and Venezuela saw heavy volumes, with prices bouncing off the lows in the morning to rally.

“Good volumes overall, with the bulk of activity earlier in the session and tapering off post-Federal Open Market Committee minutes,” he said. “Flows were mostly balanced.”

Middle East in focus

Looking to the Middle East, trading was busy on Wednesday, with the new 2020 notes from DP World standing out, a London-based trader said.

“Saudi Electricity Co. was a touch wider, with two-way interests,” he said. “Active in the Kuwaiti space, with two-way on Burgan Bank’s perpetuals.”

Chinese bus maker sells notes

China’s Zhengzhou Yutong Bus, through Sinostrong International Ltd., priced RMB 1 billion 4% notes due May 28, 2018 at par to yield 4%, a market source said.

Bank of China and HSBC were the bookrunners for the Regulation S deal.

The issuer is a bus manufacturer based in Zhengzhou.

Avation prints bonds

In a small deal on Wednesday, Singapore’s Avation plc, through subsidiary Avation Capital SA, priced $100 million 7½% notes due in 2020 at 99, according to a company announcement.

R.W. Pressprich, DBS Bank and Seaport Global Securities LLC were the lead arrangers and initial dealers for the transaction.

The proceeds will be used to finance and refinance the group’s acquisition of commercial passenger aircraft.

Other details were not immediately available.

Roadshow for Guangzhou issuer

China’s Guangzhou Communications Investment Group Co. Ltd. will set out on Thursday for a roadshow to market a dollar-denominated issue of notes, a market source said.

DBS and Deutsche Bank are the bookrunners for the Regulation S deal.

The issuer invests in and manages transportation projects.

BRF sets marketing trip

Brazil’s BRF SA is planning a roadshow to market a euro-denominated issue of green bonds via BNP Paribas, BofA Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley and Santander GBM, a market source said.

The roadshow will begin on May 26 in Frankfurt, Zurich, Geneva and Paris and conclude on May 27 in Amsterdam and London.

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

BRF is a food company based in Itajai, Brazil.

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