Oman sells notes; Turkey deals with downgrades; debate, oil get attention; Cemex takes a hit

By Christine Van Dusen

Atlanta, Sept. 27 – Oman sold notes on a Tuesday that saw investors focusing on the U.S. presidential debate, oil prices and Turkey.

“We’re off to a stronger start this morning, partly also due to yesterday’s U.S. presidential debate,” a London-based analyst said. “The aftermath saw the Mexican peso as the big winner, but general market sentiment seems to benefit from the positive sentiment this morning as well.”

Meanwhile, oil prices remained in the spotlight ahead of Wednesday’s OPEC meeting on the sidelines of the International Energy Forum in Algiers.

“Recent comments showed mixed expectations on a deal to freeze oil production and stabilize oil markets,” he said. “Over the weekend, a Saudi official said that the meeting would rather be a ‘consultation,’ but other comments stated that the Kingdom had offered production cuts.”

From Latin America, corporates opened with a “slightly better tone, although some credits so far are still languishing,” a New York-based trader said.

The curve for Mexico-based Cemex SAB de CV, which “took a hit” on Monday, moved a little bit higher “with no institutional buy support at all,” he said.

All of this came against the backdrop of some positive news in the region. A historic peace deal was hammered out between the government in Colombia and the FARC rebel group. Colombians will vote on the deal in a referendum on Sunday, “with opinion polls showing sufficient support to ratify the deal,” the analyst said.

By day’s end, most emerging markets bonds were soft, with spreads moving 3 basis points to 5 bps wider, overall, a trader said.

Downgrades in Turkey

Looking to Turkey, sovereign credit entered the session on Tuesday about 20 bps wider and corporate bonds 30 bps to 40 bps wider, following the country’s downgrade from Moody's Investors Service.

Five-year credit default swaps spreads moved to 260 bps, a trader said.

On Tuesday, bond spreads moved about 5 bps wider with some small selling, another trader said, “although a few buyers are stepping in at the wider levels.”

Longer-dated bonds cheapened up on Tuesday, he said.

“Most of the bad news and events seem to be out of the way, creating a clearer technical [backdrop] going forward,” he said.

Finansbank stands out

Investors were also eyeing Turkish banks after Moody’s took actions, the analyst said.

“Among the banks under our scope, all except for [Turkiye Finans Katilim Bankasi AS] were downgraded,” he said.

This was in line with expectations, given that Finansbank already had a lower rating and has a strong ownership profile, he said.

“The market has moved on, and there are mechanisms in place that dampen down the need to [unload] bonds on a downgrade,” the trader said.

Said another trader, “Turkey banks and corporates are mainly Street-driven by short covering, but client flow is biased towards selling, especially front-end banks where we are see some blocks come out of the Middle East.”

Oman prices taps

Oman priced $1.5 billion in taps of its 3 5/8% notes due June 15, 2021 and its 4¾% notes due June 15, 2026, a market source said.

The $500 million 3 5/8% notes due 2021 priced to yield Treasuries plus 230 bps. The notes were talked at Treasuries plus 230 bps to 235 bps.

The original $1 billion 3 5/8% five-year notes priced in June at 99.887 to yield mid-swaps plus 245 bps, following talk in the 262.5 bps area.

The new $1 billion 4¾% notes due in 2026 priced to yield Treasuries plus 315 bps. The notes were talked at a spread of Treasuries plus 315 bps to 320 bps.

The original $1.5 billion 4¾% 10-year notes priced at 99.827 to yield mid-swaps plus 320 bps, following talk in the 337.5 bps area.

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

Other details on the new deals were not immediately available on Tuesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.