Tunisia prints notes; Russian bonds improve; Entel sees strong volumes, small gains

By Christine Van Dusen

Atlanta, July 22 – Tunisia sold notes on Tuesday as bonds from Russia opened somewhat stronger and credit default swaps tightened amid mixed flows.

“Yesterday saw spreads widen anywhere from 20 basis points to 50 bps in Russian banks as investors became concerned about possible further harsh sanctions,” a London-based analyst said. “But news overnight will have calmed some concerns.”

After some delay, the rebels at the site of the Malaysian Airlines crash in Ukraine have handed over the bodies of the victims and the black boxes from the airplane. Investigators will now be able to conduct a more thorough examination of the site.

“That alone will likely ease pressure on European leaders to impose strong sanctions [against Russia] at tonight’s meeting,” the analyst said.

In response, Russian credit default swap spreads tightened 5 bps on Tuesday.

“If sanctions do occur tonight, they will likely be limited to individuals, or possibly companies,” she said. “Sector sanctions cannot be introduced unless approved by heads of national governments.”

Meanwhile, bonds from Ukraine had been mostly unchanged so far this week, according to Svitlana Rusakova of Dragon Capital.

“The sovereign remained squeezed at the long end,” she said.

From Latin America, low-beta credits moved tighter on the day amid lighter flows, with credit default swaps for Brazil narrowing, a New York-based trader said.

Argentina’s bonds ended the session mixed after a judge said that a stay would not be granted and settlement talks would continue with investors who had opted not to restructure their bonds after a default in 2002.

Discount bonds declined to 87.25, the trader said.

LatAm corporates see gains

In news from the Latin American corporate arena, the tone improved by the end of the day on Tuesday, another New York-based trader said. And volumes were “solid.”

Credits that were recently weak saw some small gains during the session while banks and corporates from Colombia were stronger, he said.

The recent issue of 4¾% notes due 2026 that Chile’s Empresa Nacional de Telecommunicaciones SA (Entel) priced at 99.763 saw strong volumes and managed small gains, he said.

Other Chilean corporates were mostly quiet.

Mexico-based Unifin Financiera SAPI de CV’s recent 6¼% notes due 2019 that priced at 99.472 ticked higher on Tuesday, he said.

Turk Telekom tightens

In other trading, bonds from Turk Telekom were slightly tighter than those from its peers following the release of earnings that were in line with consensus.

The company saw a 1.3% year-over-year decline in second-quarter revenues, a trader said.

“The results are relatively neutral,” she said.

The company is expected to issue new notes soon.

“Standard & Poor’s was relatively clear that a successful bond issuance and improvement to the debt maturity profile would result in an upgrade to BBB-, so we would still expect this to occur,” she said.

Tunisia sells notes

Tunisia priced $500 million seven-year notes at par to yield 2.452%, a market source said.

JPMorgan and Natixis were the bookrunners for the deal.

And Pakistan is looking to issue $1 billion in Islamic bonds, a market source said.

The sovereign is expected to select bookrunners in the next two weeks.

Bahrain picks banks

Bahrain has mandated Citigroup, Gulf International Bank and Standard Chartered Bank for a dollar-denominated offering of notes, a market source said.

The notes are expected to carry a 30-year tenor.

The sovereign previously announced plans for euro-denominated notes.

No other details were immediately available on Tuesday.

EM should grow

Taking a big-picture look at emerging markets bonds, the asset class is expected to see single-digit growth through the rest of the year, according to Luz Padilla, director of the emerging markets fixed-income fund and low-duration emerging markets fixed-income fund at DoubleLine Funds.

In a webcast, she discussed the challenges that the asset class faced in 2013 and how EM bonds managed to bounce back some during the beginning of this year.

“EM continues to outperform, relative to its developed-market peers, and continues to be in a pretty steady state,” she said. “We did see significant outflows from the retail space, certainly starting in the May, June time frame until February this year. Then we started to see those flows come back.”

Hyflux, Pacific Andes price

On Monday, Singapore-based environmental services company Hyflux Ltd. sold S$175 million perpetual notes at par to yield 4.8%, according to a company announcement.

Credit Suisse was the bookrunner for the Regulation S deal.

The proceeds will be used for investments, general working capital and general corporate purposes.

And China’s Pacific Andes Resources Development Ltd. priced S$200 million three-year notes at par to yield 8½%, according to a company announcement.

The issuer is a Hong Kong-based seafood company.

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