South Africa, Hutchison, Israel bring deals to primary; oil news boosts EM; Turkey, Ghana eyed

By Christine Van Dusen

Atlanta, Sept. 29 – South Africa, China’s CK Hutchison Holdings and Israel sold new notes on a more positive Thursday for emerging markets assets, as oil producers on the sidelines of the International Energy Forum in Algiers reached a preliminary agreement to curb oil production for the first time since 2008.

“Individual output levels will only be finalized at the next official OPEC meeting in November, certainly a risk factor for the month ahead,” a London-based analyst said. “The agreement is, overall, supportive nonetheless and caught investors off-guard in terms of timing, given that Saudi Arabia and Iran had previously referred to the meetings as consultations while the Russian delegation had already left Algiers earlier in the day.”

In response to the new agreement, bonds from the Middle East were “broadly stronger,” he said, with cash pricing moving about 3 basis points tighter, on average.

Turkey remained an underperformer at the open, following the downgrade from Moody’s Investors Service.

But as the morning went on, Turkey’s bonds “turned a corner,” with the sovereign’s 6 5/8% notes due 2045 moving to 116 1/8 bid from 114 7/8, a trader said.

Investors were also keeping an eye on Ghana after the International Monetary Fund approved the next $116 million tranche of aid, following a review of economic and monetary reforms, the analyst said.

“This should provide further support for the Ghana curve in the near term, in addition to recovering oil prices, with Ghana’s 9¼% 2022s having tightened circa 70 bps on yield since issuance,” he said.

Middle East tightens a touch

Bonds from the Middle East put in a “lackluster” session, but spreads did manage to tighten by a couple of basis points on Thursday, a trader said.

“Plenty of two-way on the Oman deals,” he said.

The sovereign printed $1.5 billion of taps of its 3 5/8% notes due June 15, 2021 and its 4¾% notes due June 15, 2026.

The $500 million 3 5/8% notes due 2021 priced at 100.905 to yield 3.414%, or Treasuries plus 230 bps. On Thursday they traded at 101.06 bid, 101.12 offered.

Oman moves higher

Oman’s new $1 billion 4¾% notes due in 2026 priced at 100.317 to yield 4.708%, or Treasuries plus 315 bps. On Thursday they traded at 100.60 bid, 100.65 offered, the trader said.

Citigroup, JPMorgan, MUFG Securities, National Bank of Abu Dhabi and Natixis were the bookrunners for the Rule 144A and Regulation S deal.

“Perpetuals were firmer today, with most pushing 25 cents to 50 cents higher,” he said. “Some bids around on Saudi Electricity Co. 2022, 2023 and 2024, with paper once again for sale on SECO 2043, and 2044,” he said. “Some demand on short-dated Lebanon bonds, which have been looking cheap for a little while.”

UNB trades up

In other trading, the new issue of notes from Abu Dhabi’s Union National Bank PJSC – $600 million 2¾% notes due in 2021 that priced Wednesday at 99.592 to yield Treasuries plus 172.3 bps – saw some activity, a trader said.

The notes were spotted up at 99.65 bid, 99.80 offered.

ANZ, Commerzbank, HSBC, Mizuho, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S deal.

“Can probably tighten a little from here, given they’re redeeming a bond next month,” he said.

South Africa sells notes

In its new deal, South Africa priced a $3 billion issue of notes due Oct. 12, 2028 and 2046, according to an informed source.

The deal included $2 billion 4.3% notes due 2028 that priced at par to yield 4.3%, following talk in the 4 5/8% area.

The $1 billion 5% notes due in 12 years priced at par to yield 5%, following talk in the 5 3/8% area.

Barclays Bank, HSBC, JPMorgan and Nedbank were the bookrunners for the deal, concurrent with a tender offer.

The proceeds will be used for general purposes of the government, including financial investment and the refinancing, repurchase or retiring of domestic and external debt. A portion of the proceeds will also be used for liability management transactions, including the payment of the purchase price for the old notes.

Three tranches from Hutchison

Also on Thursday, China’s Hutchison – via CK Hutchison Finance (16) (II) – priced a three-tranche deal that included $750 million notes due in 2021, $500 million due in 2026 and €1 billion due in 2024, according to a syndicate source.

The $750 million 1 7/8% notes due Oct. 3, 2021 priced at 99.342 to yield 2.014%, or Treasuries plus 90 bps.

The $500 million 2¾% notes due Oct. 3, 2026 priced at 99.092 to yield 2.855%, or Treasuries plus 130 bps.

And the €1 billion 7/8% notes due Oct. 3, 2024 priced at 99.211 to yield 0.978%, or mid-swaps plus 90 bps.

BNP Paribas, Citigroup, Credit Agricole, Goldman Sachs and HSBC were the bookrunners for the Regulation S deal.

Israel prints tap

Israel priced a $200 million tap of its 4½% notes due Jan. 30, 2043 at 113.377 to yield Treasuries plus 140 bps, according to a filing from the sovereign.

Barclays Capital was the bookrunner for the Securities and Exchange Commission-registered deal.

Global Bank plans issuance

In other deal-related news, Panama’s Global Bank Corp. is planning to issue new notes with a tender offer for its 4¾% notes due 2017, according to a company announcement.

The total purchase price will be $1,033.75 for each $1,000 principal amount of notes tendered by 5 p.m. ET on Oct. 12, the early tender date. The total amount includes an early tender premium of $50.00 per $1,000 principal amount.

Global Bank “has consented” to the offer but will not be making it, according to a company announcement. The notes purchased by Deutsche Bank under the offer will be sold back to Global Bank, to be paid for with proceeds from the new issue of senior notes.

Deutsche Bank and JPMorgan are the dealer managers.

The issuer is a bank based in Panama City, Panama.

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