Gazprom’s new notes slip below par; MashreqBank joins deal calendar; Pemex slips again

By Rebecca Melvin

New York, Feb. 7 – PJSC Gazprom’s newly priced 5.15% notes traded below their reoffer price on Thursday after the Russian natural gas producer priced $1.25 billion of the seven-year notes at par, according to a market source.

The notes were quoted 99.6 bid, 99.9 offered at the end of Europe’s trading session.

It was “not [trading] real well,” the London-based source said, citing the large deal size and low new issue premium as challenges for the new issue.

The source said estimates on new issue premium varied, with the most generous being 5 basis points to 10 bps.

“People are waiting for more to come,” the source said.

In the Middle East and Africa region, United Arab Emirates’ MashreqBank PSC announced that it is planning a new issue and has mandated banks and set a roadshow for a proposed U.S. dollar-denominated five-year benchmark offering of notes.

The fixed-income investor meetings are scheduled to begin Monday and wrap up on Thursday with stops in the UAE, Asia and Europe.

BNP Paribas, BofA Merrill Lynch, Commerzbank, MashreqBank, Nomura and Societe Generale are bookrunners for the privately-owned bank’s Regulation S deal.

In Latin America, the air continued to seep out a pop in the bonds of Petroleos Mexicanos SAB de CV on Tuesday when Mexican president Andres Manuel Lopez Obrador pledged more support for the debt-laden oil company. It remains unclear what that support will look like as the clock ticks toward large debt payouts of $5.3 billion in May.

Investors are hoping that any new initiative will build on the government’s promise in January to cut $3.5 billion in taxes for Pemex over six years. That move was not strong enough to inspire confidence that the company would be able to access the bond market for new issuance at good rates, and Fitch downgraded the oil major by two levels to BBB-, citing persisting negative free cash flow and material under-investment in the company’s upstream business.

Pemex’s 6.35% notes due 2048 were trading around 87 on Thursday, which was down from trades around 88 on Wednesday and after popping to as high as 90 on Tuesday.

Trades were lighter than usual. Pemex’s 6˝% notes due 2027 traded down to 94.73 from 96.1 on the Luxembourg exchange and Pemex’s 6˝% notes due 2029 were little changed at 94.3.

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