Agricultural Bank of China, Sunac issue notes; oil prices tighten spreads; Russia in focus

By Christine Van Dusen

Atlanta, Dec. 2 – Agricultural Bank of China and China’s Sunac China Holdings Ltd. sold notes on Tuesday as the decline in oil prices – and a temporary truce at Ukraine’s Donetsk airport – pushed Russian bonds tighter.

Notes from Russia narrowed about 7 basis points while credit default swaps spreads moved in 4 bps, a London-based analyst said.

The truce at the airport could pave the way for a ceasefire on Friday, he said.

Also from Russia, OAO Gazprom announced that it would cancel the multibillion-dollar South Stream gas pipeline project under pressure from the European Union and amid gas prices.

“President Putin said Russia would focus on a new Black Sea pipeline to Turkey,” he said. “It is difficult to take a definitive view on the outcome of this, but it does mean that Ukraine will remain vital to Russia, given that the South Stream pipeline was designed to avoid Ukraine.”

This means Russia will likely want to “work towards a long-term situation in Ukraine, although at the same time it shows that Russian-Western relations remain very tense,” he said.

Looking to Turkey, bonds were tighter on Tuesday morning while credit default swaps spreads narrowed 1 bp, he said.

“Turkey is still well-bid, in general,” he said.

For bonds from the Middle East, the drop in oil prices meant liquidity – already thin, as is typical in December – was poor on Tuesday, a London-based trader said.

“The biggest underperformer remains Bahrain, which is fairly understandable, given their published break-even oil price,” he said. “Kuwaiti names are, on the flip side, fairly well-supported.”

Bonds from Qatar and Abu Dhabi held in, he said, while the 2022 notes from Morocco and Bahrain both moved out 50 bps.

Meanwhile, Dubai names have had an “interesting” past seven sessions or so, he said.

“Their economy, as everyone is aware, is much more geared towards logistics, trade, tourism as opposed to oil,” he said. “So some of the names have been trading relatively well.”

Chinese bank prices notes

Agricultural Bank of China sold $500 million 2¼% notes due Dec. 9, 2017 at 99.683, a market source said.

Agricultural Bank of China, Citigroup, DBS Bank, Deutsche Bank, Goldman Sachs, JPMorgan, Standard Chartered Bank and Wells Fargo were the bookrunners for the deal.

The lender is based in Beijing.

Sunac China sells bonds

Sunac China sold $400 million 8¾% notes due Dec. 5, 2019 at par to yield 8¾%, a market source said.

HSBC, Citigroup, Credit Suisse, ICBC International and Morgan Stanley were the joint bookrunners and joint lead managers for the proposed Regulation S deal. HSBC was the global coordinator.

The proceeds will be used to refinance existing debt.

Sunac is a Tianjin, China-based residential and commercial property developer.

Lodha gives guidance

India’s Lodha Developers Private Ltd. set talk in the mid-to-high-10% area for a dollar-denominated issue of notes (expected ratings: Ba3//B+), a market source said.

JPMorgan and BofA Merrill Lynch are the bookrunners for the Regulation S notes, which will be non-callable for three years.

The real estate developer is based in Mumbai.

© 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.