National Bank of Kuwait, Hikma sell bonds; Pacific Rubiales downgraded; Ukraine gets support

By Christine Van Dusen

Atlanta, April 1 – National Bank of Kuwait and Jordan’s Hikma Pharmaceuticals plc sold notes on a Wednesday that saw Brazil’s Pacific Rubiales Energy Corp. remain in the news after a ratings downgrade and amid continuing rumors about an upcoming meeting with investors.

Standard & Poor’s knocked Pacific Rubiales down to BB/negative from BB+/watch negative.

“May have spooked some people, because the bonds got hit immediately on the news, in spite of oil having its strongest day in two months,” a London-based trader said. “Bonds are down anywhere between 50 cents and 1 point.”

Meanwhile, market-watchers were buzzing about a possible investor meeting, during which the company could discuss ways to restructure its debt.

“Current oil prices are too low for the company to service its debt,” according to a report from Schildershoven Finance BV.

Pacific Rubiales’ 5 3/8% notes due in 2019 traded at 66 bid, 67 offered after Tuesday’s levels of 66 bid, 67¼ offered.

The 7¼% notes due in 2021 were spotted at 66 bid, 67 offered after Tuesday’s 67¼ bid, 68¾ offered while the 5 1/8% 2023s were seen at 56¼ bid, 57¼ offered after Tuesday’s 57½ bid, 59 offered.

And the 5 5/8% 2025s traded Wednesday at 58 bid, 59 offered after trading Tuesday at 58½ bid, 59½ offered.

This latest news added to the pile for Pacific Rubiales, which recently reported disappointing earnings, suspended dividends and saw its bonds plummet after a contract change with Ecopetrol SA meant other operators would likely run Rubiales Field.

Ukraine bonds see support

In other news, sovereign bonds from Ukraine have seen support so far this week, according to Fyodor Bagnenko, a fixed income trader with Dragon Capital.

The curve was stronger by about a ½ point, he said.

“In the quasi- sovereign space, [OJSC Oschadbank’s bonds] were better bid while [State Administration of Railways Transport of Ukraine’s (Ukrzaliznytsia) bonds] were offered,” he said. “Buyers emerged in corporate bonds but were reluctant to chase the market higher.”

Kuwait Bank does deal

In its new deal, National Bank of Kuwait priced a $700 million issue of 5¾% perpetual notes at par to yield 5¾%, a syndicate source said.

The notes were talked at a yield in the high-5% area.

HSBC, Standard Chartered Bank, Citigroup, National Bank of Abu Dhabi and NBK Capital were the bookrunners for the Regulation S deal.

Hikma issues notes

Jordan’s Hikma Pharmaceuticals priced $500 million 4¼% notes due in April 2020 to yield mid-swaps plus 287.5 basis points, a market source said.

The notes were talked at a spread in the 300-bps area.

Citigroup, Barcalys, HSBC and National Bank of Abu Dhabi were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance debt and for general corporate purposes.

Hikma is an Amman, Jordan-based pharmaceutical company that produces branded and non-branded generic and in-licensed products.

Ecuador could print bonds

Also on Wednesday, market sources were whispering about a possible issue of notes from Ecuador, given that the size of the sovereign’s recent issue –$750 million 10½% notes due 2020 that priced at par – fell short of expectations.

Nigeria bonds ‘well supported’

From Africa, bonds from Nigeria received attention on Wednesday after former military ruler and head of the All Progressives Congress Muhammadu Buhari unseated incumbent Goodluck Jonathan to win the presidential election, a trader said.

“The market’s well supported,” he said. “We see ongoing nibbling of bank names, and sovereign paper appears to be opening at least 25 bps tighter.”

Turkish bonds don’t react

Also on Wednesday, Turkey was rocked by a widespread power outage and the news that the chief prosecutor who had been taken hostage inside a courthouse by militant communists was killed when security forces stormed the building.

But “power cuts and hostage situations are doing little to effect the market,” a trader said. “The sovereign curve is unchanged but tighter on rates.”

Hong Kong Telecom sees orders

The new issue from Hong Kong Telecommunications Ltd. – $500 million 3 5/8% notes due Feb. 15, 2025 that priced at 98.991 to yield Treasuries plus 178 bps – was more than eight times oversubscribed, a market source said.

The final book was $1.4 billion from more than 270 accounts, with 79% from Asia and 21% from Europe.

Fund managers, sovereigns and central banks took 77%, insurers 8%, private banks 8% and banks 7%.

BofA Merrill Lynch, HSBC, Mizuho Securities, ANZ, Deutsche Bank, Morgan Stanley and Standard Chartered Bank were the bookrunners for the Regulation S deal.

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