Issuance from Turkey, Sritex; EM assets move higher, tighter; Oman, Sovcomflot advance deals

By Christine Van Dusen

Atlanta, June 1 – Turkey and Indonesia’s PT Sri Rejeki Isman Tbk (Sritex) were among the issuers to sell notes on Wednesday as solid economic news from the United States first hurt emerging markets assets, then boosted them up.

“The reversal showed that maybe good news really is good news,” a New York-based trader said. “Latin American credit stages an impressive comeback. The market opened very weak and it looked as if we were in for a selloff, but as equities and oil pared losses, EM credit regained footing.”

Five-year credit default swaps spreads from Brazil closed at 360 basis points from 365 bps, while Mexico’s moved to 170 bps from 172 bps.

“Cash prices get a boost from spread tightening and the long-end U.S. Treasury rally, as the market closes at best levels of the day,” he said. “Latin American high yield finishes mixed on the day, with Venezuela largely unchanged as Argentina gaps higher.”

Venezuela’s 2027s finished the day at 42.25 from 42.50, PDVSA’s 2017s closed unchanged at 64.75, and Argentina’s Bonar 2024s ended up at 112 from 111. The sovereign’s 2026s closed at 105.75 from 104.85.

“Flows two way for the most part with volumes tapering off in the afternoon.”

In other trading, the new issues that have come from the Middle East so far this year have been a “real mixed bag,” a trader said.

“In the laggards’ camp is Qatar’s five- and 10-year,” he said, also pointing to DP World’s 2023s.

Outperformers include Kuwait-based Boubyan Bank’s perpetuals and Emirates Islamic Bank’s 2021.

Turkey prices notes

In its new deal, Turkey priced $1 billion 4.251% notes due June 8, 2021 at par to yield 4.251%, or mid-swaps plus 290 bps, a market source said.

The notes were initially talked in the mid-swaps plus 315 bps area.

“Hot on the heels of Qatar we have more EM sovereign supply,” a trader said.

Emirates NBD, HSBC and Standard Chartered Bank are the bookrunners for the sukuk.

“Turkey is less bearish than most, and positioning is already underweight, so I think a cheap five-year sukuk is an easy way to add defensive exposure in Turkey,” a London-based trader said, prior to pricing. “The performance of the deal will probably be dictated by size.”

Turkey’s existing 4.498% 2024s, comparable to the new issue, were trading Wednesday at 98.37 bid, 98 7/8 offered.

Sritex sells bonds

Indonesia’s Sritex priced $350 million 8¼% notes due June 7, 2021 at par to yield 8¼%, a market source said.

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

The proceeds will be used to fund the repurchase of the company’s 9% notes due in 2019 in a tender offer. Other proceeds will be used for repayment of working capital loans and for general corporate purposes.

Sritex is an Indonesian manufacturer of textiles.

Orlen launches

Poland’s PKN Orlen launched €750 million notes due June 7, 2023 at mid-swaps plus 260 bps, a market source said.

BNP Paribas and Societe Generale CIB are the global coordinators and – along with Citigroup, ING, PKO BP, Santander and UniCredit – the joint lead managers and bookrunners for the Regulation S deal.

The issuer is an oil refiner based in Warsaw.

Roadshow for Sovcomflot

Russia’s PAO Sovcomflot will set out on Thursday for a roadshow to market a dollar-denominated issue of benchmark-sized notes alongside a tender offer, a market source said.

Citigroup and JPMorgan are the joint global coordinators and joint lead managers and bookrunners. ING, Sberbank CIB and VTB Capital are joint lead managers and bookrunners for the Rule 144A and Regulation S deal.

The roadshow will begin in London and travel to Moscow, New York and Boston before concluding on June 8 in Zurich.

SCF Capital Ltd. began a tender offer for its $800 million 5 3/8% notes due 2017 guaranteed by PAO Sovcomflot.

Sovcomflot is a maritime shipping company based in St. Petersburg, Russia.

Oman plans roadshow

Oman will set out on Thursday for a roadshow to market a dollar-denominated issue of benchmark-sized notes, a market source said.

Citigroup, JPMorgan, MUFG Securities, National Bank of Abu Dhabi and Natixis are the bookrunners for the Rule 144A and Regulation S deal.

“There is further chatter in the market about other supply, and plenty of names being mentioned,” a London-based trader said. “I suspect it will likely be a very interesting six months ahead for this space as the market adjusts to supply indigestion and an ongoing tricky macro environment.”

Investors also have become accustomed to “limited supply and super-strong technicals in this region, so when a few issues all come along at once, they typically take a step back, and this can lead to the secondary becoming fairly defensive and sloppy in places, which is how it is starting to feel now.”

Qatar draws orders

The final book for Qatar’s new three-tranche issue of $9 billion issue of notes due June 2, 2021, 2026 and 2046 totaled $19.7 billion, a market source said.

The $3.5 billion 2 3/8% five-year notes priced at 98.924 to yield Treasuries plus 120 bps after talk in the 125 bps area.

The $3.5 billion 3¼% 10-year notes priced at 98.963 to yield 150 bps after talk in the 155 bps area.

And the $2 billion 4 5/8% 30-year notes priced at 97.606 to yield 210 bps after talk in the 215 bps area.

HSBC, JPMorgan, MUFG and QNB Capital were the joint global coordinators and – along with al khaliji, Barclays, BofA Merrill Lynch, Deutsche Bank, Mizuho Securities and SMBC Nikko – the joint lead managers and joint bookrunners for the Rule 144A and Regulation S deal.

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