New deals from BCE, Lenovo, Bharti Airtel; Treasuries take a toll; several roadshows ahead

By Christine Van Dusen

Atlanta, June 3 – China’s Beijing Construction Engineering Group Co. Ltd., China’s Lenovo Group Ltd., India’s Bharti Airtel and Czech Republic-based Ceske drahy AS were among the issuers to print notes on Wednesday amid higher Treasury yields and some wider spreads for Latin American assets.

“Cash prices take their cue from weak global markets and take a leg lower,” a New York-based trader said. “Brazil was firm for a good part of the session but finally followed peers lower as the rates sell-off proved too much.”

Among high-yield names from Latin America, Venezuela finished the session mostly unchanged while Argentina moved higher as oil prices reversed course, he said.

Flows, overall, were light at the start of the session but did increase as the day went on and volatility continued, he said.

Asian bonds closed Wednesday broadly unchanged amid selective real-money demand, despite higher U.S. Treasury yields, a London-based trader said.

“Led to several outperformers in the China and Korea space,” he said. “Rest of the accounts are sidelined, expecting for higher yields to come.”

Bonds from Cnooc Ltd. were range-bound, he said, with some better demand for the company’s 2020s.

“Financials are firm but quiet,” he said.

Export-Import Bank of Korea’s (Kexim) 2025 traded higher, he said.

“Bonds are now back to year-to-date tights, and it’s hard to see much upside at these levels,” he said.

“India is a touch firmer after the [central bank] cut rates by ¼%,” he said.

In deal-related news, Brazil’s Oi SA, MFB Hungarian Development Bank plc (MFB) and National Bank of Abu Dhabi PJSC planned roadshows for upcoming issuances.

Beijing corporate sells bonds

In its new deal, China’s Beijing Construction Engineering Group priced $500 million 3.85% notes due June 10, 2018 at par to yield 3.85%, a market source said.

The notes were talked at a yield in the 3% area.

BNP Paribas, Bank of China, Bocom Hong Kong branch, Shanghai Pudong Development Bank and Wing Lung Bank were the bookrunners for the Regulation S deal.

The proceeds will be used for investment and construction projects.

“We think fair value should be 3.71% to 3.76%, hence see some upside at the final price guidance,” a trader said, prior to pricing. “However, we would exercise some caution on this deal, given high supply.”

Primary hosts Lenovo

China-based technology company Lenovo Group sold RMB 4 billion 4.95% notes due June 10, 2020 at par to yield 4.95%, a market source said.

Agricultural Bank of China, Citigroup, DBS Bank, ANZ, Barclays, BNP Paribas, China Construction Bank, Credit Suisse, MUFG Securities, Shanghai Pudong Development Bank and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The company plans to use the proceeds for general corporate purposes including working capital.

Bharti Airtel issues notes

Indian telecommunications company Bharti Airtel sold $1 billion 4.37% notes due 2025 at a spread of 210 basis points over Treasuries, a market source said.

The notes were talked at a spread of 220 bps.

BofA Merrill Lynch, Barclays, Deutsche Bank, HSBC, Standard Chartered Bank, BNP Paribas were the bookrunners for the deal.

Price talk looked “tight versus the secondary, but we expect the deal to price flat to the existing Bharti 2024s at Treasuries plus 198 bps,” a trader said, prior to pricing.

Czech company does deal

Prague-based rail operator Ceske drahy priced a two-tranche issue of €115.2 million notes due in seven and 10 years, according to a company announcement.

The deal included €37.7 million 1.89% notes due 2022 and €77.5 million 3% notes due 2035.

Erste Group Bank AG was the sole bookrunner.

Woori Bank sets talk

Korea’s Woori Bank set talk in the 5% area for a dollar-denominated issue of Basel III tier one notes due in 30 years, a market source said.

BofA Merrill Lynch, Barclays, Citigroup, Commerzbank and Nomura Securities are the bookrunners for the deal.

Three Gorges gives guidance

China Three Gorges Corp. (CTG) set talk for a 10-year issue of dollar-denominated notes and a seven-year issue of euro-denominated notes, a market source said.

The 10-year notes were talked at a spread of Treasuries plus 165 bps, and the seven-year notes were talked at a spread of mid-swaps plus 110 bps.

JPMorgan, Deutsche Bank, ICBC, Goldman Sachs, Bank of China, Societe Generale CIB, CCB International and Citic CLSA Securities are the bookrunners for the deal. Guotai Junan International, Haitong International and Santander Global Banking and Markets are the co-managers.

“We see fair value of the new dollar 10-year at Treasures plus 141 bps,” a London-based trader said. “We see fair value of the new euro seven-year at mid-swaps plus 80 bps.”

Talk from Latam Airlines

Santiago, Chile’s Latam Airlines Group SA set initial talk in the 7¼% area for a $500 million issue of five-year notes, a market source said.

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

The proceeds will be used to fund the company’s outstanding 9½% notes due 2020.

Oi to market euro notes

Brazil-based telecommunications company Oi will set out on Thursday for a roadshow to market a euro-denominated issue of notes, a market source said.

BB Securities, BofA Merrill Lynch, HSBC, Santander GBM, Bradesco BBI, Citigroup, Deutsche Bank, BNP Paribas, BTG Pactual and Itau BBA are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow will be held in Europe.

MFB plans roadshow

Budapest’s MFB will set out on a roadshow starting June 8 for a euro-denominated issue of notes, according to a company announcement.

BNP Paribas, Citigroup and Societe Generale CIB are the bookrunners for the Regulation S deal.

The roadshow will start in London and travel to Germany before concluding on June 10 in Zurich.

Investor meetings for NBAD

National Bank of Abu Dhabi will depart on June 8 for a roadshow to market a benchmark-sized issue of dollar-denominated notes, a market source said.

Citigroup, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Societe Generale CIB are the bookrunners for the Regulation S deal.

The roadshow will take place in Asia and Europe.

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