Russian assets shrug off new sanctions; Malaysia’s Cagamas, Viva Industrial issue notes

By Christine Van Dusen

Atlanta, Sept. 12 –Malaysia’s Cagamas Bhd. and Singapore’s Viva Industrial Trust printed notes on Friday as the European Union instituted new sanctions against Russia for its activities in Ukraine.

“After days of deliberation, the E.U. finally agreed to implement further sanctions on Russia,” a London-based analyst said. “The sanctions were largely as expected, focused on banning new debt and loans for banks, defense and energy companies.”

But Russian assets didn’t react strongly to the news, given that the European Union is expected to lift the sanctions if a ceasefire holds. Russian bank bonds were 6 basis points tighter, on average, for the week, with particularly good performance from Vnesheconombank and OAO Sberbank.

“Russian credit was fairly quick to stabilize after the announcement,” he said. “We now await the U.S. sanctions, which are largely expected to match the E.U. ones.”

Some Russian bonds did suffer a bit, though, including the perpetual notes from JSC VTB Bank. Those notes moved 17 bps wider, he said.

And Gazprombank OJSC’s 2023s were 13 bps wider, he said.

Sovereign bonds from Ukraine, meanwhile, saw support into the end of the week, said Svitlana Rusakova of Dragon Capital.

Long-dated bonds performed well, she said, and quasi-sovereigns and corporates were “the stars,” she said.

Investors focused more on the list of new issues during the week, which included notes from Hong Kong, the Emirate of Sharjah, Dubai’s Emirates NBD, Mexico’s Mexichem SAB de CV, Chile’s Empresas CMPC SA, China Great Wall Asset Management Corp., Poland and Malaysia’s Cagamas.

“Both the Bahrain 30-year and Sharjah 10-year have performed well, up 1.4 points and 0.9 points above reoffer, respectively,” the analyst said. “The Emirates NBD perpetual has been the weakest performer, trading slightly below reoffer.”

From Latin America, liquidity was thin while investors closely watched U.S. rates, a New York-based trader said.

Bonds from Brazil-based Vale SA widened about 7 bps, he said, while Mexico’s Cemex SAB de CV remained weak.

Corporates from Peru and Chile fared better, he said, but remained under pressure.

Spreads narrow

Most Middle Eastern banks saw their notes tighten an average of 2 bps during the week, a trader said.

Kuwait’s Burgan Bank – which is expected to issue new notes soon – was the top performer in that arena, with its 2020 notes tightening by 16 bps.

“In contrast, other perpetual paper underperformed, moving about 23 bps to 31 bps wider.”

In other trading during the week, the new notes from Arcelik moved up 0.15 points while Ghana’s notes were seen trading about 0.85 points higher than issuance.

Cagamas sells bonds

Malaysia’s Cagamas printed RMB 1.5 billion 3.7% notes due Sept. 22, 2017 at par to yield 3.7%, a market source said.

Bank of China, HSBC and Maybank were the bookrunners for the Regulation S deal.

Cagamas is a mortgage company based in Kuala Lumpur.

Viva Industrial Trust prints notes

Singapore’s Viva Industrial Trust printed S$100 million 4.15% notes due Sept. 19, 2018 at par to yield 4.15%, a market source said.

Standard Chartered Bank was the bookrunner for the Regulation S deal.

Indonesian corporate sets talk

Indonesia’s PT Mitra Pinasthika Mustika Tbk set talk at 6¾% to 6 7/8% for its planned issue of $200 million notes due in five years, a market source said.

Deutsche Bank is the bookrunner for the Regulation S deal.

The proceeds will be used primarily for refinancing existing debt, and for capital expenditures.

The issuer is an automotive company based in Jakarta.

Chinese bank gives guidance

China Development Bank set talk for a three-tranche issue of renminbi-denominated notes due in three, five and 10 years, a market source said.

The three-year notes were talked at a yield of 3.35%.

The five-year notes were talked at 3.6%.

The 10-year notes were talked at 4.35%.

Bank of China, CCB International, BOCOM, HSBC, Standard Chartered Bank and BNP Paribas are the bookrunners for the Regulation S deal.

China Development Bank is a financial institution based in Beijing.

El Salvador does deal

On Thursday, El Salvador sold $800 million 6 3/8% notes due Jan. 18, 2027 at par to yield 6 3/8%, a market source said.

The notes were talked at a yield in the 6¾% area.

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

© 2015 Prospect News.
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