New deal from Fantasia; Russia, Turkey in focus; Chinese yields climbed; Qatar banks eyed

By Christine Van Dusen

Atlanta, Dec. 20 – China-based Fantasia Holdings Group Co. Ltd. priced a bond tap on Tuesday as investors watched Russia and Turkey – following the shooting in Turkey of Russia’s ambassador to Syria – while they awaited results of a meeting on the Syrian conflict.

“Yesterday was overshadowed by the assassination of the Russian ambassador to Turkey, the suspected terrorist attack in Berlin and a shooting at an Islamic center in Zurich,” a London-based analyst said. “The incident in Turkey saw initial market nervousness late yesterday, not least because the attack happened in a time of recovering Russia and Turkey relations a little over a year after the downing of a Russian Sukhoi jet by the Turkish airforce.”

Both countries stressed that the attack “will not cause a reversal in their relationship and that both sides vow to fight together against terrorism,” he said. “With indications that the attack was related to the Syria conflict, Russia could further step up its fight there.”

All of this could hurt Turkish tourism, he said, with arrivals in October already having plunged about 26%, year-over-year.

“The attack on Russian ambassador in Turkey and a probable terrorist attack in Berlin may trigger a risk-off mood among global investors,” according to a report from Schildershoven Finance BV. “The correction should not be too deep and too long.”

Bonds look “overpriced, as spreads to the base curve have declined since Donald Trump’s win,” the report said. “Downside risk is prevailing in the market at the moment.”

Looking to Asia, yields on China’s sovereign debt due November 2026 climbed 10 basis points to 3.5%, the highest since August 2015, Schildershoven said.

Qatar banks in focus

In other news from emerging markets, three Middle Eastern banks are planning to merge to becoming the biggest Islamic lender in Qatar.

Meanwhile, Commercial Bank of Qatar completed its acquisition of the remaining stake in Alternatifbank.

This comes as market sources were whispering that Qatar – as well as Bahrain, Saudi Arabia, Oman, Kuwait and Abu Dhabi – could bring new bonds in 2017.

Fantasia prints tap

In its new deal, China-based Fantasia priced a $100 million add-on to its 7 3/8% due Oct. 4, 2021 at 99.884, according to a filing.

Guotai Junan International was the bookrunner for the Regulation S deal.

The proceeds will be used to refinance indebtedness.

The original $400 million issue priced on Oct. 4.

Fantasia Holdings is a property development company based in Shenzhen, China.

© 2015 Prospect News.
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