Issuance from Islamic Development Bank; Russian bonds strengthen slightly; sukuk perform

By Christine Van Dusen

Atlanta, March 5 – Saudi Arabia’s Islamic Development Bank sold notes on Thursday as Russian bonds opened slightly stronger after coming under pressure from the possibility of increased sanctions from Europe.

The United States, which recently announced an extension of sanctions against Russia, is “working closely with Europe on deeper sectoral sanctions,” a London-based analyst said.

Russian bonds were also reacting to oil price declines on Wednesday, he said.

Paper from Turkey opened mostly unchanged on Thursday, following a weak Wednesday session that stemmed from the devaluation of the lira.

In other trading on Thursday morning, Croatia’s new issue of 3% notes due 2025 that priced at 97.845 to yield mid-swaps plus 255 basis points was spotted near reoffer, he said.

Barclays, Erste Group, JPMorgan and UniCredit/Zagrebacka banka were the bookrunners for the Regulation S deal.

Spreads for Middle Eastern bonds started out Thursday mostly flat, a trader said, after investment grade names tightened on Wednesday between 1 bp and 4 bps.

Later in the session, sukuk were holding in well, another trader said.

“Some other markets are a little heavy,” he said. “The recent Abu Dhabi Commercial Bank 2020s are doing what these issues normally do, and that’s widen in the initial week of trading. Of course, over time, it should be fine.”

Euro-denominated notes from Gulf region were particularly popular, he said.

Meanwhile, Asian bonds put in a mostly subdued session on Thursday, with high-grade cash bonds closing unchanged, a London-based trader said.

“The focus was mainly on new issues as real-money accounts were sidelined,” he said. “Most of the demand at these yield levels has been filled.”

Property companies better bid

Property companies from China were generally better bid on Thursday, a London-based trader said.

And the new issue of notes from China Shanshui Cement Group Ltd. – 7½% five-year notes that priced Wednesday at 98.98 – traded up at par before bouncing between 99¾ and 100 1/8 and closing at 99¾ bid, par offered.

“In high-yield sovereign, light flows today,” he said. “Banks remained as better buyers.”

Interest in Cencosud falters

Looking to Latin America, volumes and inquiry for Chile-based Cencosud SA’s recent notes declined on Thursday, a New York-based trader said.

The deal included 5.15% notes due in 2025 that priced at 99.637 and 6 5/8% notes due in 2045 that priced at 99.909.

“The 2045s are once again dipping back down after a mid-week run last week to 99.90, which did surprise me,” he said. “It’s now faltering 2½ points in a week.”

He attributed the decline to the small issue size and the duration, which were both out of investors’ comfort zones.

HSBC and Scotiabank were the bookrunners for the Rule 144A and Regulation S deal.

Petrobras tightens

Brazil-based Petroleo Brasileiro SA saw its bonds tighten about 7 bps, but client inquiry was almost nonexistent, another New York trader said.

Headlines continue to crop up about the company, as Brazil’s Supreme Court was expected to investigate 54 more people for allegedly participating in corruption with Petrobras.

In other news from Latin America, Mexico’s Cemex SAB de CV reported “quite respectable” fourth-quarter earnings and was making strides with its debt management strategy, he said.

“This recent downtrade could be a pause to flush out some sellers after a nice run up,” he said.

Turkey sees sellers

Banks from Turkey saw mostly sellers on Thursday, even before credit default swaps spreads for the sovereign backed off, another London-based trader said.

“Not a surprise, as buyers had been few and far between for a few days, and the lira is still under pressure,” he said.

IDB prices notes

Saudi Arabia’s Islamic Development Bank – through IDB Trust Services Ltd. – sold $1 billion 1.831% notes due March 12, 2020 at par to yield mid-swaps plus 8 bps, a market source said.

Talk was set in the mid-swaps plus 10-bps area.

CIMB, Dubai Islamic Bank, GIB Capital, HSBC, Natixis Securities, NCB Capital, National Bank of Abu Dhabi, RHB Islamic Bank and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The issuer is a Jeddah, Saudi Arabia-based lender.

Mexico’s KCM talks bonds

Kimberly-Clark de Mexico SAB de CV set talk in the Treasuries plus 135-bps area for a $250 million issue of notes due in 10 years, a market source said.

BofA Merrill Lynch and Citigroup are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes and capital expenditures.

KCM is 48%-owned by Kimberly-Clark Holland Holdings BV, a subsidiary of consumer products company Kimberly Clark Corp.

America Movil sells notes

On Wednesday, Mexico’s America Movil SAB de CV priced a Ps. 3.5 billion issue of 7 1/8% notes due Dec. 9, 2024 at 99.481 to yield 7.195%, or Bonos plus 138 bps, according to a company filing.

BBVA, Citigroup, Credit Suisse, Deutsche Bank, HSBC and Morgan Stanley were the bookrunners for the Securities and Exchange Commission-registered deal.

The original Ps. 7.5 billion of 7 1/8% notes due 2024 priced at 99.728 to yield 7.16%, or Bonos plus 125 bps, in June.

America Movil is a Mexico City-based telecommunications company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.