ENAP, NTPC sell notes; Lat-Am catches a bid, spreads tighten; Vale Overseas advances deal

By Christine Van Dusen

Atlanta, Aug. 3 – Chile’s Empresa Nacional del Petroleo (ENAP) and India’s NTPC Ltd. sold notes on Wednesday as Latin American bonds were “relentlessly bid” and Turkey’s sovereign notes widened.

“Latin American credit goes relentlessly bid today, with spreads tightening and cash prices gapping higher,” a New York-based trader said. “Brazil continues to outperform and has five-year credit default swaps closing at 284 basis points from 294 bps. Brazil cash gapped higher by multiple points late in the afternoon, with buyers seeking the 2026s and 2047s in particular.”

Five-year credit default swaps spreads for Mexico closed Wednesday at 153 bps from 158 bps, underperforming, “but cash made a nice bounce late in the day and does close higher,” he said.

Bonds from Argentina moved higher while Venezuela and PDVSA moved lower, with Argentina’s Bonar 2024s closing at 116 from 115.70 and the 2026s at 108.10 from 107.60, he said.

Venezuela’s 2027s finished in the 46 area from 47.50 and PDVSA’s 2017s closed at 72.50 from 76.50 on the news that the country’s president had replaced several members of his cabinet.

“The cabinet-shuffling announcement out of Venezuela had bonds gapping lower at the open, but they but did recoup some losses later in the day,” he said. “Flows saw better buyers on the day, with volumes picking up late in the session. Not much to explain the move higher late today, aside from a nice oil bounce, but the magnitude of this move was more indicative of the lack of market depth rather than a shift in fundamentals going on in EM credit realm.”

Pemex well-offered

Petroleos Mexicanos SAB de CV (Pemex) was well-offered, with prices off by about 25 cents to 50 cents, another trader said.

“Most credits continue to get pulled lower to varying degrees,” he said. “Most, if not all, credits continue to trade with a strong technical aspect. Dealers trying to stay nimble as summer doldrums quickly approach and oil and equities are also under consistent pressure.”

Selling pressure for Chile

High-grade bonds from Chile tried to hold on to recent gains but saw some selling pressure and thin liquidity, another trader said.

And Mexico’s Cemex SAB de CV, which last week showed positive momentum on the back of a strong earnings report, backed off and saw client selling pick up again, he said.

Banks from Mexico were under pressure while selling of banks from Colombia was light.

“They are all being pulled lower this week after barely hanging in last week,” he said.

Turkey widens

Looking to Turkey, the sovereign curve widened on Wednesday by as much as 7 bps amid limited client flow, a trader said.

“Most seemed to be positioned already leaving the Street to play with plenty of technicals on the curve,” he said. “Turkey has underperformed by 2 bps to 3 bps versus the market as the latest inflation print was higher than expected, but the [Central Bank] had warned they expected some near-term spike in inflation.”

Banks from Turkey saw Asian buyers at the start of the session amid low-volume selling, he said.

“Corporates are still trading fairly well,” he said.

ENAP sells notes

In its new deal, Chile-based energy company ENAP priced $700 million 3¾% notes due Aug. 5, 2026 at 98.353 to yield 3.951%, a market source said.

The notes were issued to help fund a $600 million tender offer.

Citigroup and JPMorgan were the bookrunners for the deal.

NTPC prices green bonds

Also on Wednesday, India’s NTPC priced a Rs. 20 billion issue of notes due Aug. 10, 2021 at a yield of 7.48%, a market source said.

Axis Bank, HSBC, MUFG and Standard Chartered Bank are the bookrunners for the Regulation S issue of green bonds.

The proceeds will be used to finance investments in renewable energy projects.

Vale Overseas seeks issuance

Brazil’s Vale Overseas Ltd. is planning to issue dollar-denominated notes, according to a company filing.

BB Securities, BNP Paribas, Bradesco BBI, Citigroup and Morgan Stanley are the bookrunners for the Securities and Exchange Commission-registered deal.

The notes will include a make-whole call.

The proceeds will be used to pay part of the redemption price of the 6¼% notes due January 2017, issued by Vale Overseas.

Vale is a Rio de Janeiro-based producer of iron ore and nickel.

© 2015 Prospect News.
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