China Orient Bank prices bonds; leaders from Ukraine, Russia meet; guidance from Link REIT

By Christine Van Dusen

Atlanta, Aug. 26 – China Orient Bank Corp. sold notes on a quiet Tuesday for emerging markets assets, following the holiday in the United Kingdom, as the presidents of Ukraine and Russia met to talk about gas supplies and trade.

Investors were looking for signs that the leaders want to calm conflict at Ukraine’s eastern border, but “expectations are low for a breakthrough,” a London-based analyst said.

Sovereign bonds from Ukraine entered the shortened week lower while credit default swap spreads for Russia were mostly flat and trading activity was limited.

The Russian sovereign’s 3½% 2019 notes that priced at 99.195 and traded last week at 99.55 bid, 100.05 offered moved to 99.38 bid, 99.88 offered on Tuesday, a London-based trader said.

Russia’s 4 7/8% notes due 2023 that priced at 98.162 were spotted Tuesday at par bid, 100½ offered after trading last Tuesday at 100½ bid, 101½ offered.

The 3 5/8% notes due in 2020 that priced at 99.533 and traded last week 101½ bid, 102 offered were seen Tuesday at 101.62 bid, 102.12 offered, he said.

In other news from Russia, Moscow-based OAO TMK released second-quarter earnings that came in slightly below consensus.

The company’s 2017 bonds have widened almost 200 basis points and the 2020s about 177 bps since the United States’ sanctions and as a result of a low cash balance, the analyst said.

But even though its bonds have been “among the worst performers” since the United States instituted sanctions, “we believe TMK offers a potentially attractive story in the long-term, given the potential benefits of the Gazprom Power of Siberia project,” he said.

China Orient Bank sells notes

In its new deal, China Orient Bank – through Charming Light Investments – priced a two-tranche issue of $1 billion notes due in 2019 and 2024, a market source said.

The deal included $600 million 3¾% notes due in 2019 that priced at a spread of 225 bps over Treasuries.

The $400 million 5% notes due in 2024 priced at a spread of 275 bps over Treasuries.

Bank of China, ICBC, Morgan Stanley and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Other pricing details were not immediately available on Tuesday.

Link REIT sets talk

In other deal-related news, China’s Link Real Estate Investment Trust set talk at Treasuries plus 145 bps for a dollar-denominated issue of benchmark-sized notes due in 10 years, a market source said.

ANZ, DBS and HSBC are the bookrunners for the deal.

Link is a Hong Kong-based real estate investment trust that invests in retail and parking facilities.

Market sources were also whispering about a possible five-year issue of dollar notes from India-based Reliance Communications Ltd.

Rizal plans reopening

Philippines’ Rizal Commercial Banking Corp. is looking to reopen its 5 3/8% notes due Sept. 27, 2024, according to a company announcement.

The new issue will total up to PHP 3 billion of tier 2 notes. The bank is authorized to issue up to PHP 10 billion in one or more issuances.

Deutsche Bank’s Manila Branch is the sole bookrunner.

The bank plans to use the proceeds “to support asset growth as well as expand the bank’s long-term funding base,” the announcement said.

The original issue totaled PHP 7 billion and was issued on June 27.

The issuer is a Makati City-based bank.

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