Yapi Kredi sells notes; Turkey bonds see activity; Lat-Am gets a boost; roadshow for Femsa

By Christine Van Dusen

Atlanta, March 1 – Turkey’s Yapi ve Kredi Bankasi AS (Yapi Kredi) sold notes on Tuesday as expectations rose for further quantitative easing in Europe and the market reacted to new stimulus and data in China.

“China data was weak this morning but looks to be countered by a strong yuan fix and the [requirement reserve ratio] cut yesterday,” a trader said. “This is the way I see it playing out for the near term: We will continue to see a steady decline in the yuan but stimulative policies to counteract some of the slowing in manufacturing.”

In trading, two-way activity continued for Turkey’s banks and corporates, he said. “We are likely to see some issuance from banks in the near term.”

Indeed, Yapi Kredi brought its new deal on Tuesday, a $500 million issue of 8½% notes due March 9, 2026 that priced at 99.50 to yield 8 5/8%, following talk in the 8¾% area.

BofA Merrill Lynch, Citigroup, MUFG Securities and UniCredit Bank were the bookrunners for the Rule 144A and Regulation S deal.

“I don’t think investors actually expected them to pull the trigger with a high-8% initial price guidance,” a trader said before the deal priced. “When you look at the secondary curve, it’s just way off when compared to [Turkey’s Turkiye Vakiflar Bankasi TAO (Vakifbank)]. What I think we are seeing here is a realization that deal execution risk is higher, and a nod to the fact that liquidity so far in 2016 has been awful.”

Turkey, Azerbaijan trade

Meanwhile, Turkish sovereign bonds were seeing mostly bids during the day, another trader said.

“Credit default swaps have collapsed somewhat, with the amount of risk being lifted out of the Street through sovereign cash,” he said.

In other trading on Tuesday, Azerbaijan continued to see two-way action, though the picture was softer than in previous weeks, another trader said.

And Pakistan remained in demand, he said, with the sovereign’s 2019 bonds squeezing higher.

“The trade here is, for sure, to sell the 2019s and buy 2024s,” he said.

Lat-Am moves higher, tighter

From Latin America, bonds moved higher and tighter on Tuesday, with more institutional buying, which helped push bids higher, a New York-based trader said.

“We’re back once again to the scenario where sourcing is becoming quite challenged in certain credits,” he said.

Mexico-based Cemex SAB de CV moved north, with “no real client buying to speak of” after “being stuck in the mud” on Monday, he said.

Femsa sets roadshow

Mexico’s Fomento Economico Mexicano SAB de CV (Femsa) will set out on March 7 for a roadshow to market a euro-denominated issue of notes, a market source said.

BBVA, Credit Suisse and Deutsche Bank are the bookrunners for the deal.

The roadshow will begin in London and travel to Paris, Frankfurt, Munich and the Netherlands before concluding on March 11 with a breakfast in Zurich.

Femsa is a Monterrey-based Coca-Cola bottler.

© 2015 Prospect News.
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