Eyes on France election; Sri Lanka, Panama price new deals; Oman Electricity in pipeline

By Colin Hanner

Chicago, May 5 – Middle Eastern sovereigns were tending to drift lower from emerging markets on Friday, and Venezuela ranged from unchanged to lower from its close on Thursday as declining crude oil futures worldwide continue to impact sovereign and corporate bonds alike.

“While the subdued oil price performance has not trickled through to affect emerging market credit spreads much until recently, today’s opening sees the commodity complex and emerging markets overall under pressure,” a market source said.

In the geopolitical sphere, Emmanuel Macron will face Marine Le Pen in the second and final round of voting for France’s presidential election on Sunday, the outcome of which will have massive effects on world markets.

“[A] Macron win will nonetheless boost confidence in markets,” a market source said. “On the other hand, a Le Pen surprise win would serve as a massive shock to markets which would also dent investor confidence in [emerging markets].”

Trading for Turkey’s $1.5 billion 30-year issue and Fibabanka AS’ $300 million 10-year notes continued into Friday after pricing earlier in the week, a market source said, adding that, aside from those bonds, “all is quiet on the emerging market side.”

Turkey’s deputy prime minister, Nurettin Canikli, announced a series of messages for Turkey’s monetary future on Thursday, including staying clear of regulations for banks, allowing banks to securitize all assets and asserting that the late liquidity window rates are a temporary measure given the current “extraordinary conditions.”

“In line with previous comments, the government remains concerned about high interest rates, which it sees as a constraint for growth,” a market source said.

Sri Lanka sells $1.5 billion

In the new deal space, Sri Lanka priced $1.5 billion 6.2% 10-year notes at par on Thursday, a market source said.

A market source said initial price guidance for the notes (//B+) was in the 6 5/8% area, eventually tightening to 6.2%.

Citigroup, Deutsche Bank, HSBC, Standard Chartered Bank, Morgan Stanley, Citic Securities and ICBC were lead managers for the deal.

Panama’s add-on, new issue

Panama priced an add-on to its 2028 dollar bonds and a new issue of 2047 dollar bonds on Thursday, the company said in an FWP filing with the Securities and Exchange Commission.

Panama sold a $253,988,000 add-on to its 3 7/8% notes due March 17, 2028 at 102.332 to yield 3.608%, or 125 basis points over Treasuries.

The notes will be consolidated and will form a single series with the $1 billion of 3 7/8% bonds due 2028 previously issued by Panama on March 17, 2016.

Also, Panama sold $1,168,292,000 of 4½% 30-year notes at 99.759 to yield 4.515%, or 150 bps over Treasuries.

BofA Merrill Lynch and Morgan Stanley & Co. LLC were underwriters for the deals.

Proceeds from the notes will be used for liability management and general budgetary purposes.

Pipeline ahead

A market source said Oman Electricity Transmission Co. SAOC might issue a 10-year benchmark sukuk soon, adding that investor meetings began Thursday and will continue through Monday.

“Otherwise, I’d be surprised if nothing else came given the market is in pretty good shape,” the source said. “We’re about three clear weeks ahead of Ramadan, and people have pretty much released [first quarter] numbers and incorporated those numbers.”

Senegal, which previously announced it will issue a eurobond in the coming weeks, has mandated banks for investor meetings from Monday through May 15 ahead of a dollar-denominated benchmark bond with a maturity up to 16 years, a market source said.

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