Indian bonds see good demand; Pacific Rubiales rises with oil; Egyptian bank to issue notes

By Christine Van Dusen

Atlanta, March 20 – High-grade paper from Asia saw activity pick up in the afternoon on Friday, mostly driven by trading of bonds from India, while Pacific Rubiales Energy Corp. undulated and National Bank of Egypt SAE planned a new issue.

“Had good demand out of Europe, as we were lifted on short-dated Indian paper,” a London-based trader said. “The rest of the high-grade space is going out relatively unchanged.”

China-based Yuzhou Properties Co. Ltd. saw its bonds bounce back sharply after the company denied involvement with the vice governor of Fujian, who is being investigated for graft.

“However, despite the late the rally, the curve is still closing 2 points lower,” he said. “We traded two-way on the Yuzhou 2019s.”

In other trading, emerging markets-focused Pacific Rubiales saw its prices rise on Friday at the end of a difficult week, a London-based trader said.

The energy company on Monday started out on weak footing after its bonds tumbled about 6 points on oil prices. Then Ecopetrol SA announced it was looking for other operators of the Rubiales field and not continuing its contract with Pacific Rubiales.

Completing the trifecta, Pacific Rubiales released quarterly earnings that included a loss that exceeded analysts’ expectations.

The company’s 5 5/8% notes due 2025 that priced at 99.045 dropped significantly, then gained back some ground on Friday to trade at 55.50 bid, 56.75 offered on the move in oil prices, he said.

In deal-related news, National Bank of Egypt is planning a dollar-denominated issue of benchmark-sized notes, a market source said.

The notes are expected to price during the second quarter of this year.

Other details were not immediately available on Friday.

Empresas ICA faces challenges

One bank was recommending that investors steer clear of Mexico’s Empresas ICA SAB de CV, which saw its credit rating downgraded by Standard & Poor’s to B with a stable outlook from B+.

The ratings agency made the change as a result of the company’s slower-than-expected debt reduction, according to a report from Schildershoven Finance BV.

“The outlook is stable due to expectations of a continued recovery for ICA’s backlog execution and operating performance,” the report said.

But Mexico’s government spending on infrastructure projects is expected to decline, which could hurt ICA, the report said.

“The situation is unpredictable but the probability is higher that the company will find additional private funds,” Schildershoven said. “Nonetheless, investors should avoid the company, as the situation is unpredictable and margins are too low.”

Slovenia releases final book

The final book for Slovenia’s new issue of €1 billion 1½% notes due 2035 that priced at 99.095 to yield mid-swaps plus 72 bps showed orders of €1.3 billion, a market source said.

Investors in Germany and Austria picked up 39.8% of the deal, Slovenia 14%, Italy 12%, the United Kingdom 11.3%, other parts of Europe 7.9%, France 7%, the Middle East and Africa 2.1% and others 5.9%.

Fund managers accounted for 66.7%, banks 23.3%, insurers and pension funds 4.3%, central banks and official institutions 4.2% and others 1.5%.

© 2015 Prospect News.
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