Investors embrace risk; Greece inches closer to bankruptcy; Sinopec, Pelindo, FirstRand active

By Christine Van Dusen

Atlanta, April 24 – Risk appetite increased for emerging markets investors on Friday, with good two-way flows seen for many bonds, even as Greece appeared to moving closer to bankruptcy.

“Overall, the tone remains positive,” a trader said.

Indeed, the market was embracing Brazil’s Petroleo Brasileiro SA and Brazil-based Vale SA, with the latter’s bonds tightening as much as 25 basis points into Friday, a New York-based trader said.

“Overall risk-on mood, Petrobras and Brazil high-grade are grinding higher and iron ore supply and expansion is suddenly slowing, sending prices markedly higher,” he said. “Clients continue to be better buyers.”

Low-beta spreads from Latin America ended Friday mostly unchanged after moving tighter earlier in the session, a New York-based trader said.

“Cash prices are slightly higher, with the rally in Treasuries, with the exception of Brazil, which closed slightly lower,” he said. “Brazil’s 2025s closed at 100.90 from 101.30 yesterday and Brazil’s 2045s at 98½ from 98¾.”

From Africa, the new issue of notes from Nigeria’s Africa Finance Corp. – 4 3/8% notes due 2020 that priced at 99.027 to yield 4.595% – performed well in trading, a trader said.

The notes were seen Friday at 100.30 offered.

Citigroup, MUFG, Standard Bank and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

Yields on some bonds from peripheral Europe spiked on news that Greece will not receive any more aid until it agrees to an economic reform plan, a trader said.

But most notes from Central and emerging Europe were largely unaffected on Friday, he said.

“Let’s see if we see a follow-through,” he said. “Flow is muted so far.”

Asia stays firm

Looking to Asia, most names ended the week on firm footing, with high-grade cash unchanged to a couple of basis points tighter, a London-based trader said.

“New issues remained in focus as Asian accounts trimmed risk ahead of the weekend,” he said.

Romania, Turkey ‘stable’

Street sellers emerged for Romania’s 2044s, a trader said, but the notes stabilized in the range of 126¼ to 126¾.

“The Turkey sovereign is pretty stable,” he said. “We’re seeing buyers in the Street.”

The sovereign’s bonds closed the day tighter by 1 bp.

“The long end felt offered,” another trader said. “I guess there is still an overhang of paper out there, apart from Turkey’s 2045, which outperformed.”

Lat-Am in focus

Argentina bonds bounced off their weakest levels of the week and ended the day up ¼ point to ½ point, a trader said.

“Next week will provide ample catalysts in the form of economic data and the Federal Open Market Committee for the market to digest, but hopes remain that we can continue this move higher and tighter,” he said.

Paper from Colombia was “unusually quiet,” he said, while high-grade bonds from Mexico ticked a bit higher.

“Buyers continue to peruse the market and lift,” he said. “Chile high grade is tough to source and very well bid.”

Sinopec sees action again

Investors were still paying attention to the new five-tranche issue of dollar- and euro-denominated notes from China Petrochemical & Chemical Corp. (Sinopec Group).

That deal included $2.5 billion 2½% notes due 2020 priced at 99.576 to yield Treasuries plus 125 bps after talk in the 145-bps area. Those notes were unchanged on Friday, at 124 bps bid, 122 bps offered, a trader said.

The 3¼% notes due 2025 that priced at 99.022 to yield Treasuries plus 145 bps, after talk in the 160-bps area, were seen at 144 bps bid, 141 bps offered on Friday.

The 4.1% notes due in 30 years that priced at par to yield Treasuries plus 152 bps, following talk in the 180-bps area, traded at 151 bps on Friday.

The deal also included 0.5% notes due 2018 that priced at 99.716 to yield 0.596%, or mid-swaps plus 50 bps, following talk of 50 bps to 55 bps, and 1% notes due 2022 that priced at 99.243 to yield 1.113%, or mid-swaps plus 80 bps, matching talk.

Pelindo dips

The new two-tranche issue of $1.6 billion notes from Indonesia’s PT Pelabuhan Indonesia II (Persero) (Pelindo II) opened at reoffer on Friday but “quickly dipped as fast money sold,” a trader said.

The $1.1 billion 4¼% 10-year notes priced at 98.996 to yield 4 3/8% after talk in the 4 5/8% area. The tranche drew an order book of $4 billion from 245 accounts.

The $500 million 5 3/8% 30-year notes priced at 98.174 to yield 5½% after talk in the 5 5/8% area. The final book was $1 billion from 80 accounts.

“The 10-year traded to lows of 98¼ and was last seen at 98 bid, 98½ offered, while the 30-year traded at 97 and closed at 96¾ bid, 97¼ offered.”

ANZ, BNP Paribas, Citigroup, Bahana Securities and Danareska Sekuritas were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to fund expansion, refinance a syndicate loan and for general corporate purposes.

FirstRand trades higher

Meanwhile, South Africa-based FirstRand Bank Ltd.’s new 4¼% five-year notes that priced at 99.617 to yield 4.336%, or mid-swaps plus 280 bps also outperformed, the trader said.

BofA Merrill Lynch, BNP Paribas, Rand Merchant Bank and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The notes were seen Friday at 101 offered, he said.

Landsea Green sets talk

China-based Landsea Green Properties Co. Ltd. set talk at 9½% for a $100 million issue of three-year notes, a market source said.

Haitong International Securities is the bookrunner and the lead manager for the Regulation S deal.

The proceeds will be used to finance mergers and acquisitions, for working capital and for general corporate purposes.

Landsea is a Nanjing, China-based investment holding company that focuses on property investment, property development and trading, securities investment and securities trading, and financial services.

Shinsegae sets roadshow

South Korea’s Shinsegae Co. Ltd. will set out on April 28 for a roadshow to market a dollar-denominated issue of perpetual notes, a market source said.

Citigroup is the bookrunner for the Regulation S deal.

Shinsegae is a Seoul-based department store franchise.

PGE seeks issuance

Poland’s Polska Grupa Energetyczna SA (PGE) is looking to issue notes during the second half of this year, a market source said.

Other details were not immediately available on Friday.

Market sources also were whispering about a possible issue of dollar-denominated bonds from Dubai-based DPWorld and that the issue from Ghana could come to the market in June.

New deal from Guacolda

Chile’s Empresa Electrica Guacolda SA priced a $500 million issue of 4.56% notes due April 30, 2025 at 99.944 to yield Treasuries plus 262.5 bps, a market source said.

The notes were talked at a spread in the 300-bps area.

Citigroup, Goldman Sachs, Itau BBA and Guacolda were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repay existing indebtedness, swap breakage costs and transaction fees and expenses.

The issuer is a Santiago-based power company.

Orders for Korea Resources

The new deal from Korea Resources Corp. – $350 million 2¼% notes due 2020 that priced at 99.465 to yield 2.3665%, or Treasuries plus 97.5 bps – received more than $1.7 billion in orders from 98 accounts, a market source said.

The notes priced tighter than talk, set in the 115-bps area.

BNP Paribas, Citigroup and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

About 74% of the orders came from Asia, 20% from the United States and 6% from Europe, with 46% from fund managers, 27% from banks, 13% from insurers and pension funds, 9% from central banks and 5% from private banks.

“Bonds traded up at 91 and traded between 92 and 91, 6 bps tighter, for most of the day,” a trader said. “Closed at 93 bid, 91 offered. A few onshore accounts found it expensive, but it is still the highest- yielding five-year quasi-sovereign corporate paper in the sector.”

Issuance from Jingrui

China’s Jingrui Holdings Ltd. on Thursday priced $150 million 13¼% notes due in 2018 at par to yield 13¼%, a market source said.

The notes were talked at a yield in the 13½% area.

BOSC International, BNP Paribas, Guotai Junan Securities, Haitong International Securities and QILU International Capital were the joint bookrunners and joint lead managers for the Regulation S offering.

Proceeds from the notes will be used to refinance existing debt.

Jingrui is a Shanghai-based property developer.

YPF sells bonds

On Thursday, Argentina-based petroleum and natural gas company Yacimientos Petroliferos Fiscales SA priced $1.5 billion 8½% notes due July 28, 2025 (Caa1//CCC) at 99.097 to yield 8 5/8%, a market source said.

BofA Merrill Lynch and Credit Suisse were the bookrunners for the Rule 144A and Regulation S deal.

The final book was about $4 billion from 208 investors, with 82% of the orders coming from the U.S., 17% from Europe and 1% from Latin America.

Asset managers picked up 74%, hedge funds 22%, private banks and private portfolios 3% and insurers 1%.

Envirotech releases order book

The new issue from Singapore’s United Envirotech Ltd. – S$225 million of 4.7% notes due 2018 that priced at par – drew about S$1.8 billion in orders from 85 accounts, a market source said.

DBS Bank Ltd. and Standard Chartered Bank were the joint lead managers and bookrunners for the Regulation S deal.

About 89% of the orders came from Singapore and 11% from others, with 69% from private banks and retail, 22% from fund managers and 9% from banks.

The proceeds will be used to refinance borrowings, to make investments and/or acquisitions and for general working capital and corporate purposes.

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