EuroChem slips below par; Argentina’s century notes pare losses; Baidu prices $1.5 billion

By Rebecca Melvin

New York, June 28 – EuroChem Group AG’s newly-priced 3.95% notes slipped in trading on Wednesday after the Moscow-based fertilizer company priced $500 million of the four-year notes at par, while emerging markets overall were mostly steady despite volatility in rates and focus on oil moves, sources said.

EuroChem’s new notes were seen at 99.90 bid, 99.85 offered, a trader said, commenting on the deal pricing at the tight end of indicated terms, which “didn’t leave much on the table.”

Elsewhere, Argentina’s 100-year bonds regained about a point to trade at 91.5 on Wednesday. The bond had dropped to below 91 from 94 amid rate volatility on Tuesday, a trader said.

Argentina priced $2.75 billion of the 7 1/8% notes due 2117 on June 19.

Overall there was “a little bit of everything” trading in emerging markets as the second quarter and first half of 2017 draw to a close and as holidays continued in Europe and the Middle East and were ramping up in the United States.

Overall pricing was “steadyish,” with a little bit of selling in the debt of Poland and Hungary, among others, as those markets more closely follow the broader markets and G7 nations. Emerging markets, while influenced by the rate moves, are not as closely tied to them, and oil prices are the bigger mover in emerging markets right now, a trader said

Wednesday’s session was busier than Tuesday’s, but liquidity this week is generally light as holidays have kicked in, and the Eid holiday in Muslim nations has quieted the Middle East’s financial markets.

“A lot of people are off the desk for this week,” a trader said.

Regarding Latin American markets, a trader said liquidity was poor.

Rates volatility was stoked by various comments by central bankers. The U.S. long bond had been down a point early Wednesday but was down only about 1/3 point when European markets closed.

The gyrations “lead to some movement in long-dated assets but the emerging markets typically respond mildly to these moves and is generally behaving,” a trader said.

Bond selling was sparked on Tuesday by comments by European Central Bank president Mario Draghi about the strength of the eurozone economy. The comments were interpreted as a signal that the central bank is preparing to pull back quantitative easing.

On Wednesday, jitters were sparked by the comments of other central bankers including Bank of England governor Mark Carney, who said that removal of stimulus in Britain may become necessary if the economy improves.

In the primary emerging markets, deal flow continued. Baidu, Inc. priced $1.5 billion of senior notes, including a $900 million tranche of five-year notes that priced with a coupon of 2 7/8% and a $600 million tranche of 10-year notes that priced with a 3 5/8% coupon. The five-year notes were reoffered at 99.576 to yield 3.676%, a spread to Treasuries of 145 basis points, and the 10-year notes came at a reoffer price of 99.40 to yield 2.99%, a spread of 118 bps over U.S. Treasuries.

Goldman Sachs (Asia) LLC, J. P. Morgan Securities LLC and HSBC are joint bookrunners for the deal.

The Beijing-based web services company plans to use proceeds of the Securities and Exchange Commission-registered notes to repay existing debt and for general corporate purposes.

Shanghai-based real estate developer Greenland Hong Kong Holdings Ltd. sold $200 million of 4½% notes due 2018 at par, according to a company notice.

Credit Suisse, HSBC, China Everbright Bank Hong Kong Branch, Haitong International and UBS were the joint lead managers for the Regulation S offering.

Shimao Property Holdings Ltd. said it priced an additional $150 million of 4¾% five-year senior notes after trading hours on Tuesday.

The add-on notes will be consolidated and form a single series with the $450 million of 4¾% notes (BB/BBB-) priced on June 22.

The original notes were priced at par and the additional notes were priced at 100.5.

CICC HK Securities, HSBC and Morgan Stanley are the joint global coordinators and, along with Goldman Sachs and UBS, joint bookrunners and joint lead managers for the Regulation S offering.

Among euro-denominated deals, Mytilineos Holdings SA priced €300 million of 3.1% five-year bonds at par.

National Bank of Greece SA and Eurobank Ergasias SA were bookrunners of the public offer from the Athens-based metallurgy, construction and energy company.

Tauron Polska Energia SA’s €500 million of 10-year fixed-rate senior notes, talked at a spread of mid-swaps plus 163 bps, was also expected to price on Wednesday, but terms were not heard by Prospect News’ deadline.

Meanwhile Argentina’s Province of Cordoba’s dollar-denominated bonds via bookrunners HSBC and J.P. Morgan was on tap for Thursday’s session.

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