Indonesia, Hungarian Development issue notes; EM bonds mixed on IMF news, global headlines

By Christine Van Dusen

Atlanta, Dec. 1 – Indonesia, China’s eHi Car Services Ltd. and MFB Hungarian Development Bank Private Co. Ltd. sold notes on a firm Tuesday for many emerging markets bonds, following the announcement that the renminbi would be included in the International Monetary Fund’s reserve currency basket.

“I guess the effect of such a move will take a long time to play out,” a trader said.

In trading, banks and corporates from Turkey continued to soften, repricing “wider on issuance news and catch-up with the sovereign curve,” a trader said. “We have seen some nibbling in corporates by real money.”

This came against an increasingly tense backdrop, as Turkey and Russia argued over the downing of a Russian jet.

“The setting, however, has changed, as both country leaders were at the United Nations climate conference in Paris,” the trader said. “Russian President Putin denied a request from the Turkish president to meet [outside] of the conference.”

Instead, Putin continued to accuse Turkey of downing the plane to protect ill-gotten oil supplies, the trader said.

“The Turkish leaders also said that they will not apologize for the incident, but reiterated that they saw in Russia a ‘strategic partner’ and didn’t escalate the situation further,” he said. “In the meantime, Russia has decided to implement sanctions on Turkey, ranging from travel bans to Turkey, to food import restrictions [and a ban on] hiring Turkish nationals.”

Looking to Latin America, regional bonds were “under pressure” as a result of dynamics in commodities and the tumultuous political situation in Brazil, according to a report from Schildershoven Finance BV.

Brazil swaps flatten

Five-year credit default swaps spreads for the sovereign traded wider, in the 450-basis-points area, on Tuesday morning before settling in at 447 bps, unchanged, another trader said.

Mexico’s CDS moved to 151 bps from 154 bps.

“Cash prices spent most of the day unchanged until catching a bid late in the session, with bids popping up on screens and offers lifted,” he said. “The move higher in cash prices coincided with U.S. Treasuries and equities hitting intraday highs.”

High-yield mixed

High-yield names from Latin America were mixed on Tuesday, he said, with Venezuela moving lower and Argentina climbing higher.

Venezuela’s PDVSA saw its 2017s close at 62 from 62½ while Venezuela’s 2027s finished the day at 42½ from 44¼.

Indonesia sells bonds

In its new deal, Indonesia priced a $3.5 billion issue of notes due Jan. 8, 2026 and 2046, according to an informed source.

The deal included $2.5 billion 4¾% notes due 2026 that priced at 99.599 to yield 4.8%. The notes were talked at a yield in the 4.85% area.

The $1.25 billion 5.95% notes due 2046 priced at 99.299 to yield 6%, matching talk.

BofA Merrill Lynch, CIMB, Citigroup and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

China’s eHi sells notes

China’s eHi Car Services sold $200 million 7½% notes due Dec. 8, 2018 at a yield of 7¾%, according to a company announcement.

The notes were talked at a yield of 7¾%.

JPMorgan and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for capital expenditures and other general corporate purposes, including refinancing of outstanding debt and enhancing capital structure.

eHi is a car services and car rentals provider based in Shanghai.

Hungarian bank prices notes

Also on Tuesday, MFB Hungarian Development Bank sold €300 million 2 3/8% notes due December of 2021 at 99.79, according to a company filing.

Societe Generale was the bookrunner for the deal.

Golden Wheel gives guidance

China’s Golden Wheel Tiandi Holdings Co. Ltd. set talk in the 9¾% area for a two-year issue of dollar-denominated notes, a market source said.

BOC International, HSBC and Haitong International are the joint global coordinators and joint bookrunners for the Regulation S sale.

Proceeds will be used to refinance existing debt, to fund new property projects and for general corporate purposes.

Golden Wheel Tiandi on Monday released an update on its business, warning that it expects a “substantial decrease” in total revenue for 2015 compared to 2014.

It blamed the reduction on lower revenue from property development due to the fact that the company did not have new projects completed and delivered during 2015. Revenue from property leasing is expected to see a “modest increase” in 2015 versus 2014.

Roadshow for Kookmin Bank

South Korea’s KB Kookmin Bank will set out on Dec. 7 for a roadshow to market a dollar-denominated issue of notes, a market source said.

BNP Paribas is the lead manager for the Rule 144A and Regulation S deal.

The roadshow will be held in Europe and the United States.

Kookmin Bank is a lender based in Seoul.

Issuance from Fibra Uno

On Monday, Mexico’s Fibra Uno priced a downsized $300 million issue of 5¼% notes due Jan. 30, 2026 at 99.303 to yield Treasuries plus 312.5 bps, a market source said.

The deal was originally sized at $500 million and talked at a spread in the 312.5-bps area.

BofA Merrill Lynch, Credit Suisse, HSBC and Santander were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes, including the acquisition of additional properties and the repayment of indebtedness.

Fibra Uno acquires, develops and operates commercial real estate in Mexico.

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