First Abu Dhabi Bank slips in trade; Ukrexim price talk revised upwards; Petrobras mixed

By Rebecca Melvin

New York Feb. 27 – First Abu Dhabi Bank PJSC’s newly priced 3 5/8% five-year sukuk traded a little weaker on Tuesday after the lender operating in the United Arab Emirates priced $650 million of the Islamic bonds with a yield spread of mid-swaps plus 95 basis points.

The new sukuk was weaker by about ¼ point on its debut, a London-based trader said.

The deal priced after being postponed since the beginning of February.

Overall the market was called OK but a little choppy with rate moves, according to a syndicate source on Tuesday.

U.S. Treasuries moved around but ultimately traded lower following the testimony of Federal Reserve Chairman Jerome Powell before Congress. The new chairman said the U.S. economy is strong and the outlook is for growth. Markets worry that the strength will increase inflation, possibly over its 2% target rate.

The State Export Import Bank of Ukraine (Ukrexim) was also in the market on Tuesday, talking an offering of three-year Ukrainian hryvnia-denominated notes to be settled in dollars. But contrary to the recent trend, price guidance for the Ukrexim notes tilted higher during marketing rather than being revised lowered.

Price guidance for the notes was revised to 16¼% to 16½% from initial talk in the 16% area, according to a market source.

Also in the region, Slovenia mandated banks for a triple tranche tap that was expected to price subject to market conditions.

Slovenia plans to boost the issue size of its 1% euro notes due 2028, 1½% euro notes due 2035 and 3 1/8% euro notes due 2045.

Barclays, Deutsche Bank, Goldman Sachs International, HSBC and JPMorgan are leading the Regulation S transactions.

“The market is fine,” a London-based market source said. “It’s not bullish; it’s not bearish. New issue deals can get done, but people are paying up a little bit.”

In Latin America, the primary front for dollar-denominated deals remained mute. Meanwhile, Brazil was under pressure in the secondary market after Fitch Ratings lowered its rating of several Brazilian corporates following the Friday downgrade of the sovereign’s rating to BB- from BB.

The rating of Petroleo Brasileiro SA was downgraded to BB- from BB on Monday, and Petrobras’ 7¼% notes due 2044 traded down to 101.5 to 101.875 from more than 102.875 on Monday. But the Petrobras 8 3/8% notes due 2021 were steady at about 112.125.

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