Argentina prices massive deal; Chexim brings deal; Lat-Am spreads tighten; buyers for Turkey

By Christine Van Dusen

Atlanta, April 19 – Argentina returned to the market on Tuesday with a whopping $16.5 billion deal during a busy trading session that also saw Export-Import Bank of China (Chexim) sell notes.

“The lack of an accord on a production freeze from the Doha meetings has failed to spark a major sell-off in commodity prices and in EM assets so far,” a London-based strategist said. “At this point, Brent and WTI crude trade at similar levels versus Friday’s closing levels.”

Though a strike in oil workers in Kuwait is “certainly supportive in the short-term, the resilience can also be regarded as evidence for the strong market sentiment at this point,” he said.

All of this is driving a new wave of issuance among emerging markets names, he said. Among them, Argentina’s deal “has stolen the show.”

The sovereign on Tuesday issued $16.5 billion issue of notes in four tranches due in three, five, 10 and 30 years via Deutsche Bank, HSBC, JPMorgan and Santander as global coordinators for the Rule 144A and Regulation S deal. BBVA, Citigroup and UBS were the joint bookrunners.

The $2.75 billion 6¼% notes due 2019 priced at par to yield 6¼%. The notes were talked at 6¼% to 6½% after initial talk in the 6¾% area.

The $4.5 billion 6 7/8% notes due 2021 priced at par to yield 6 7/8%. They were talked at 6 7/8% to 7 1/8%.

The $6.5 billion 7½% notes due 2026 priced at par to yield 7½%. They were talked at 7½% to 7 5/8% after initial talk in the 8% area.

The $2.75 billion 7 5/8% notes due 2046 priced at 95.758 to yield 8%, matching talk.

The proceeds will be used to settle claims of holders of untendered debt and for general governmental purposes.

Lat-Am in focus

Latin American bonds saw their spreads tighten again into the close on Tuesday, with Brazil’s five-year credit default swaps spreads moving to 338 basis points from 340 bps after trading as tight as 332 bps earlier in the day, a New York-based trader said.

Mexico’s CDS finished at 153 bps from 157 bps.

“Cash prices continue to move higher, albeit on low volume, with long-end bonds outperforming on the day,” he said. “Lat-Am high yield also moves higher during today’s session.”

PDVSA’s 2017s moved to 54.75 from 53.75, and Venezuela’s 2027s closed at 40.75 from 39.75, while Argentina’s Bonar 2024s closed at 112.25 from 111.25.

“Volumes were subdued for external paper on the day, with two-way inquiry,” he said.

Turkey sees buyers

Buyers emerged for Turkish bonds as “worries over tomorrow’s central bank meeting subside,” a trader said. “Although we have supply on the wire, it’s not covering a broad enough spectrum to satisfy investor demands.”

The central bank is getting a new governor who “has been perceived favorably by the markets,” the strategist said, “easing fears that an outside unorthodox candidate could give in to political demands for ‘radically’ lower rates.”

Most Turkish bonds were about 10 basis points tighter on Tuesday morning.

“The market continues to tear higher and platforms are overwhelmed with [offers wanted in competition] in every type of risk there is,” a trader said. “Turkey credit default swaps last traded at 230 bps and Russia at 252 bps, levels not seen since the mid-year rally in 2015.”

Africa bouncing back

Looking to the Middle East, Bahrain’s curve was also popular and moved between 5 bps and 10 bps tighter on Tuesday.

“But investors seem pretty distracted with the multi-tranche Argentina new issue,” he said.

Bonds from Africa were “bouncing back to life after a very brief stumble, as we track oil and equities higher,” he said. “Azerbaijan is trading well but not keeping up with the Kazakhstan long end, which is around 20 bps tighter, with fast money pushing the curve higher.”

Bonds from Pakistan were mostly muted after a busy few weeks, he said.

Issuance from Chexim

In its new deal, China’s Chexim priced a three-tranche issue of $2.25 billion notes due April 26, 2021 and 2026 and €650 million notes due April 26, 2019, a syndicate source said.

The $1.25 billion notes due 2021 priced at Treasuries plus 85 bps, following talk of 85 bps to 90 bps.

The $1 billion notes due in 2026 priced at Treasuries plus 120 bps. Talk was set at 120 bps to 125 bps.

And the €650 million notes due in 2019 priced mid-swaps plus 55 bps, following talk of 55 bps to 60 bps.

Bank of China, Bocom HK Branch, Barclays, Citigroup, HSBC, Mizuho Securities and MUFG Securities were the joint lead managers for the Regulation S deal. Bocom International, ING, KGI Securities and Westpac Banking were the joint lead managers.

The proceeds will be used for general corporate purposes.

Other details were not immediately available on Tuesday.

Lebanon launches notes

Lebanon launched a two-tranche issue of $1 billion notes due April 22, 2024 and 2031 (B2/B-/B), a market source said.

The $700 million notes due 2024 launched at a yield of 6.65%, following talk in the 6.65% area.

The $300 million 15-year notes launched at 7%, following talk in the 7.05% area.

Blom Bank, Byblos Bank and Deutsche Bank were the bookrunners for the Regulation S deal.

Georgian Oil sets talk

Georgian Oil and Gas Corp. guided its $250 million issue of five-year notes to a yield in the low-to-mid-7% area, a market source said.

JPMorgan and Barclays are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to purchase previous notes and to build a combined cycle power plant and underground gas storage facility.

Georgian Oil and Gas is a Tbilisi, Georgia-based company focused on the exploration, production, transportation and sales of oil and gas resources.

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