Bank of India, Etisalat sell notes; investors await FOMC; Cnooc sets talk for jumbo deal

By Christine Van Dusen

Atlanta, April 28 – Bank of India (Jersey branch) and Abu Dhabi’s Emirates Telecommunications Corp. (Etisalat) sold notes on Tuesday as emerging markets investors became more cautious ahead of the meeting of the Federal Open Market Committee.

The tone for Asian bonds on Tuesday was softer, a London-based trader said, with high-grade cash bonds unchanged while new issues moved 1 basis point to 2 basis points wider.

“Client activity was skewed towards better selling, with accounts making space for the new issues,” he said.

The new notes from China Petrochemical & Chemical Corp. (Sinopec Group) – a five-tranche issue of dollar-denominated and euro-denominated notes due in five, 10, 30, three and seven years – received some attention in trading on Tuesday, he said.

The deal included 2½% notes due 2020 that priced at 99.576 to yield Treasuries plus 125 bps, which on Tuesday traded at 127 bps.

The 3¼% notes due 2025 that priced at 99.022 to yield Treasuries plus 145 bps were seen Tuesday at 146 bps.

This came as the company’s second-ranking executive was being investigated for alleged corruption.

“Possible violations have raised concerns in the market, but we view this headline as credit-neutral,” a trader said.

From Latin America, bonds from Mexico were a bit weaker on Tuesday in response to some weakness in U.S. Treasuries, a New York-based trader said.

Investment-grade sovereigns were also a bit weaker, he said, as risk assets softened globally.

“Seems some FOMC nervousness may be starting to set in,” he said.

Petrobras, Vale widen

Bonds from Brazil’s Petroleo Brasileiro SA and Vale SA continued to widen on Tuesday, the New York trader said, with Petrobras moving out as much as 20 bps and Vale widening between 5 bps and 7 bps.

Other names, though, performed well, he said, and real-money selling increased.

CLP Power sees activity

China-based CLP Power Hong Kong Financing Ltd.’s new $300 million 3 1/8% notes due 2025, which priced this week at 99.566 to yield Treasuries plus 125 bps, opened at 122 bps bid, 117 bps offered and traded at 120 bps before closing at 123 bps bid, 120 bps offered.

Bonds from Korea were mostly unchanged, a source said, as were those from India.

Guidance from Cnooc

In other news from Asia, China’s Cnooc Ltd. set talk for a three-tranche issue of dollar-denominated notes due in five, 10 and 30 years, a market source said.

The five-year notes were talked at a spread of Treasuries plus 150 bps.

The 10-year notes were talked at 180 bps, and the 30-year notes were talked at a spread of 170 bps over Treasuries.

The five- and 30-year notes will be issued by Cnooc Finance (2015) Australia Pty. Ltd., and the 10-year notes will be issued by Cnooc Finance (2015) USA LLC. All will be guaranteed by Cnooc.

The global coordinators, lead managers and bookrunners are BOCI Asia Ltd, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Goldman Sachs (Asia) LLC. Also acting as bookrunners are BofA Merrill Lynch, China International Capital Corp. Hong Kong Securities, ICBC International Securities Ltd., J.P. Morgan Securities LLC, Morgan Stanley & Co. International plc, Societe Generale and Standard Chartered Bank.

Proceeds will be used for general corporate purposes.

Cnooc is a Hong Kong-based oil and gas exploration and production company.

Turkey in focus

Investors were also watching Turkey, which has seen its credit default swaps spreads move 12 bps higher on the week and “some relief” in the currency, a London-based trader said.

“Leads to follow-on buying in the bank names,” he said, pointing to the 2025 notes from Turkey-based Turkiye Vakiflar Bankasi TAO (Vakifbank) and Akbank TAS.

Bank of India prices bonds

Bank of India (Jersey branch) priced $750 million 3 1/8% notes due May 6, 2020 (Baa3/BBB-) at 99.574 to yield 3.218%, a market source said.

Citigroup, HSBC and JPMorgan were the bookrunners for the deal.

Etisalat sells notes

Abu Dhabi’s Etisalat printed a $400 million tap of its 2 3/8% notes due June 18, 2019 at 101.106 to yield 2.093%, or mid-swaps plus 72.5 bps, a market source said.

HSBC and National Bank of Abu Dhabi were the bookrunners for the deal.

The original issue of $500 million 2 3/8% notes due 2019 priced at mid-swaps plus 67.5 bps.

“Makes that bond $900 million now, and pretty straightforward pricing, with the old 2019s closing at 70 bps bid, which is 8 bps wider on the week,” the source said.

Oman Electricity sets talk

From the Middle East, Oman Electricity Transmission Co. SAOC set talk at Treasuries plus 200 bps to 210 bps for a dollar-denominated issue of 10-year notes, a market source said.

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

The notes will be issue by special-purpose vehicle Lamar Funding Ltd.

“Not much paper out of Oman, save for a couple of banks,” a trader said. “I suspect this one will find support.”

Other issuers from the Middle East saw some support for their bonds on Tuesday, he said, with higher-yielders like Kuwait Energy Co. narrowing by as much as 200 bps on the month

“Perpetuals were a mixed bag,” he said.

Cuervo plans issuance

Mexico’s JB y Compania SA de CV (Cuervo) is looking to issue $500 million notes due in 10 years, a market source said.

BofA Merrill Lynch and Citigroup are the bookrunners for the deal.

The tequila producer is based in Mexico City.

Deal ahead for Kunlun

China’s Kunlun Energy Co. Ltd. is looking to issue notes, according to a company filing.

Citigroup and Morgan Stanley are the joint global coordinators for the Rule 144A and Regulation S deal, and serve as joint lead managers and bookrunners with Credit Suisse, Goldman Sachs, HSBC and Standard Chartered Bank.

The proceeds will be used for refinancing of indebtedness and for general corporate purposes.

Kunlun is a subsidiary of Beijing-based China National Petroleum Corp. (CNPC).

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