Market focused on Russia, Argentina, Israel; CDB sells bonds; China Merchants sets roadshow

By Christine Van Dusen

Atlanta, July 30 – China Development Bank printed notes on Wednesday as investors remained focused on Israel, Russia – and sanctions from the United States, European Union and Japan – and the fact that Argentina appears to be on the brink of default.

“The headlines were thick with news about turmoil in the banking industry, an impending default in Argentina, sanctions against Russia, an intensifying bombardment in Gaza, record low Bund yields, tightening spreads in the euro zone periphery and a flattening yield curve in the core of the Eurozone,” according to a report from Erste Group Research.

Argentinian officials were in New York to meet with bondholders who did not restructure their bonds after the country defaulted on debt in 2002 and have sued the sovereign. The meeting is being viewed as a last-ditch effort to evade a new default, and sent some bonds up as much as 3 points in trading on Wednesday, a trader said.

But in general, for emerging markets bonds, “there’s this eerie atmosphere of calm before the storm,” Erste Group said in its report.

The primary market was largely quiet, with just the new deal from China Development Bank, which priced RMB 500 million 4.35% notes due 2024 at par to yield 4.35%, a market source said.

HSBC, ABC International, Bank of China, Barclays and Societe Generale CIB were the bookrunners for the Regulation S deal.

And China Merchants Bank Co. Ltd. set a roadshow for a dollar-denominated issue of notes with ANZ, HSBC, Morgan Stanley, UBS, CMB International Capital, Credit Suisse and Wing Lung Bank.

The trip for the Regulation S deal will begin on Thursday.

Olam final book

The final book for Singapore-based Olam International Ltd.’s new $300 million issue of 4½% notes due 2020 was $550 million, a market source said.

The notes came to the market at 99.337 to yield 4.638%, or Treasuries plus 295 bps with ANZ, Barclays, JPMorgan and Standard Chartered Bank in a Regulation S deal.

The proceeds will be used for general corporate purposes.

About 64% of the orders came from Asia and 36% from Europe, with private banks picking up 70%, fund managers 17% and banks 13%.

Orders for Modern Land

About $310 million in orders came in for Modern Land (China) Co. Ltd.’s recent issue of $125 million 12¾% five-year notes, which recently came to the market at 99.101, a market source said.

About 79% of the orders came from Asia, 11% from the United States and 10% from Europe.

Credit Suisse Securities (Europe) Ltd., Goldman Sachs (Asia) LLC, HSBC Ltd., J.P. Morgan Securities plc, Guotai Junan Securities (Hong Kong) Ltd., Morgan Stanley & Co. International plc and CLSA Ltd. were the joint bookrunners and joint lead managers for the Regulation S offering, with Credit Suisse and Goldman Sachs as the joint global coordinators.

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

KWG attracts orders

China-based KWG Property Holding Ltd.’s new $400 million issue of 8¼% senior notes due 2019 attracted $5.25 billion from about 237 accounts, a market source said.

Goldman Sachs (Asia) LLC, HSBC Ltd., Morgan Stanley & Co. International plc, Standard Chartered Bank and UBS AG, Hong Kong Branch are the bookrunners for the Regulation S offering.

About 80% of the orders came from Asia and 20% from Europe, with 60% from fund managers, 26% from corporates, 12% from private banks and 2% from others.

The proceeds will be used to refinance existing debt and finance existing and new projects.

© 2015 Prospect News.
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