New issues from Turkey’s Yapi Kredi, National Bank of Oman; risk-on remains; Lat-Am mixed

By Christine Van Dusen

Atlanta, July 12 – Turkey’s Yapi ve Kredi Bankasi AS (Yapi Kredi) and National Bank of Oman SAOG sold notes on a mostly solid day for emerging markets assets, though bonds from Latin America were mixed as a result of Treasury moves.

“First time in a number of sessions where we are seeing mixed performance across different countries, and to a lesser degree, sectors as well,” a New York-based trader said. “Chile high-grade performance is unchanged to higher, depending on the credit.”

Banks and corporates from Colombia, however, “feel stagnant and are actually unchanged to a bit weaker,” he said. “Mexican high-grade is grinding higher, despite the Treasury move.”

Mexico-based Cemex SAB de CV saw its bonds start to move higher again, he said.

“Clients are better buyers for the first time in awhile, as Cemex flows have been mixed prior to the last week or so,” he said.

Brazil’s five-year credit default swaps spreads closed at 291 basis points from 304 bps, while Mexico’s moved to 135 bps from 143 bps, another trader said.

“Risk assets continue to perform well as EM spreads tighten once again,” he said. “Cash prices do experience some downward pressure and U.S. Treasuries see a meaningful backup. Cash bonds did start to stabilize as the reach for yield and the risk-on theme helped to support elevated levels despite Treasury weakness.”

High-yield names from the region were “mostly firmer,” though Venezuela was mixed, he said.

The sovereign’s 2027s finished at 49 from 49.50 and PDVSA’ss 2017s closed at 73.50 from 72.50. Argentina’s Bonar 2024s closed at 116.625 from 116.50, and the 2026s finished at 108.625 from 108.25, he said.

“Flows picking up from yesterday, with better sellers of low-beta Lat-Am,” he said.

Busy session for Middle East

Middle Eastern bonds put in a “very busy day,” a London-based trader said.

“On a spread basis, the liquid bonds from Abu Dhabi and Qatar are going out roughly 3 bps to 5 bps wider,” he said. “Qatar’s 2026 is down over a point versus the early morning trades yesterday morning. But then again, this has been a decent back-up in rates, which has probably caught a few off-guard.”

Balanced flows

Flows were balanced for bonds from the Middle East, with particular activity noted for Oman’s 2026s between 100.45 and 100.65, the London trader said.

“Bahrain continues to trade fairly well at the front end,” he said. “Some paper came out locally on the 2044s, last down at 84, still 25 bps tighter.”

MAF notes trade

The tap of Dubai-based Majid Al Futtaim Holding LLC’s 4¾% notes due 2024 that priced Monday at 105.322 to yield 3.95% was fairly active on Tuesday, with local adding, a trader said.

“Closing at 105¼ bid, 105.45 offered, or pretty much where it came,” he said.

The original $500 million issue priced in April of 2014 at 99.835 to yield 4.771%, or mid-swaps plus 195 bps, via Barclays, Credit Agricole, Citigroup, Emirates NBD, HSBC and Standard Chartered Bank.

Yapi Kredi prices notes

Turkey’s Yapi Kredisold $550 million 4½% notes due July 19, 2023 at 99.26 to yield 4 5/8%, or mid-swaps plus 342.6 bps, an informed market source said.

The notes were talked at a yield in the 4¾% area.

BofA Merrill Lynch, Deutsche Bank, HSBC, ING and UniCredit were the bookrunners for the Rule 144A and Regulation S deal.

“The curve had been starved of senior issuance for a while, pushing the 2019s and 2020s fairly tight versus the complex,” a trader said. “Looking at the existing curve, you could argue these seven-year seniors look cheap to the 2022s subs or the subs are too tight. And you get a decent pickup to the 2020 seniors.”

Oman bank sells bonds

In another new deal, National Bank of Oman priced a $100 million tap of its 3 1/8% notes due in 2019 at 100.62 to yield mid-swaps plus 200 bps, a market source said.

“With the return of the Middle East following the month of Ramadan, we are seeing new signs of primary market activity,” an analyst said.

The notes were talked at a spread in the 225 bps area.

Credit Agricole CIB and National Bank of Abu Dhabi were the bookrunners for the deal.

The original $500 million issue priced in October of 2014.

National Bank of Oman is the third-largest bank in Oman.

“A decent discount to where they were trading on Monday,” a trader said. “Bond went through at 101.87 bid, 101.95 on Monday.”

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