Saudi Arabia credit widens slightly; Brazil, LatAm weaker; Grupo Cementos de Chihuahua prices

By Rebecca Melvin

New York, June 21 – Saudi Arabia’s credit widened somewhat on Wednesday as Saudi equities rallied on news that Saudi Arabia’s King Salman promoted his son Mohammed bin Salam to Crown Prince from Deputy Crown Prince, replacing the king’s nephew, according to market sources.

The prince’s “sudden promotion to Crown Prince reduces risk for power struggle down the line and reaffirms a reform path, but assertiveness in foreign policy implies uncertainty,” MUFG Securities analyst Trieu Pham wrote in a note on Wednesday.

At just 31 years old, Mohammed bin Salam represents a new generation of leadership for the Middle Eastern nation and he is known to be more geared toward entertainment and livability for Saudi Arabia as well as for being an economic reformer and tough politician, who has driven involvement in a war in Yemen and backed actions to counter Iranian acts considered aggressive.

Saudi Arabia’s $9 billion of notes due 2022 and 2027, which were priced in April, were seen at 100.40 bid, 100.60 offered and 102.37 bid, 102,63 offered, respectively, on Wednesday, according to a market source. On June 12, the 2022 notes were 99.93 bid, 100.18 offered and the 2027 notes were 101¾ bid, 102 offered.

The Saudi leadership news came as market players were watching an ongoing plunge in global oil prices. On Tuesday, prices fell into bear market territory and on Wednesday, prices slipped further as investors reject the notion that oversupply problems will come into balance any time soon.

Light sweet crude for July delivery stood at $42.47 a barrel on the New York Mercantile Exchange at 4 p.m. ET, which was down 76 cents from Tuesday’s $43.23 close. Brent crude oil fell another 2.7% to $45.78 a barrel.

In Latin America credit markets, prices of sovereign and corporate debt were “quite a bit weaker especially in Brazil,” a New York-based trader said.

The most noticeable decliner was Petroleo Brasileiro SA. Its bonds were seen down about one point across the board, the trader said.

“Oil weakness combined with setbacks to Temer’s reform objectives and continued concern over the survival of his presidency” fueled investor concerns, the trader said.

The Brazilian president has been accused of receiving bribes to help businesses. He is under investigation after a plea bargain by businessman Joesley Batista of the JBS meatpacking company. Temer has denied any wrongdoing.

Also from Latin America, Mexico’s Grupo Cementos de Chihuahua SAB de CV (GCC) sold $260 million of seven-year notes at par to yield 5¼% on Tuesday, market sources said.

In a parallel transaction, GCC also bought $187,937,000 of its $260 million of outstanding 8 1/8% senior notes due 2020 in a tender offer.

BBVA, Citigroup and Scotia Capital were the bookrunners for the new notes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.