Hungary, Colbun deals edge above par; Braskem trades around issue; CEEMEA primary quiets

By Rebecca Melvin

New York, Oct. 5 – Hungary’s new 1¾% notes traded up to 100.15 bid, 100.35 offered on Thursday, after the sovereign priced €1 billion of the 10-year notes at a 1.4 point discount to par.

The Hungary notes priced at 98.592 for a yield of 1.906%, or spread of mid-swaps plus 100 basis points, which was where the deal was talked after revision during marketing.

Also in first-day trade was Turkiye Is Bankasi AS (Isbank)’s $500 million add-on to its 6 1/8% notes due 2024. The new notes, which priced at 102.017 to yield 5¾%, brought that deal size up to $1.25 billion.

Isbank is Turkey’s largest bank.

Otherwise the primary market for the Central & Eastern Europe, Middle East and Africa region was quiet, following busy action for the week so far. Abu Dhabi’s $10 billion of notes offered in three tranches remained in focus after their debut on Wednesday in the secondary market.

The new $3 billion of Abu Dhabi 2½% notes due 2022 were indicated at 99.80 bid, 99.85 offered on Thursday, which was up about 15 cents over Wednesday and with spread tightening of about 1.2 bps. The new 3 1/8% notes due 2027, of which $4 billion priced, were seen 99.37 bid, 99.45 offered on Thursday, right around issue with 1.2 bps of spread tightening. The new Abu Dhabi 4 1/8% notes due 2047, a $3 billion tranche, edged above par to 100.13 bid, 100¼ offered after pricing at 99.115. The spread was virtually unchanged.

With no new paper to evaluate, investors turned their focus to economic data. On Thursday U.S. Labor Department data showed weekly unemployment claims fell by 16,000 to 260,000 last week, as economic activity showed signs of returning to normal following recent hurricane-related disruptions.

On Friday, the Labor Department will release its widely watched monthly non-farm payrolls report. The department warned last week that the hurricanes will likely affect September’s employment figures.

There were a couple of new corporate deals that debuted in the Latin American market on Thursday.

Chile-based Colbun SA’s new 3.95% notes due 2028 traded above par to 100.14 bid, 100¼ offered after the power generator priced $500 million of the 10-year notes at 99.722 for an initial yield of 4.02%.

“Colbun is doing fine,” a New York-based trader said of the new issue.

Meanwhile, there were two new deals from Sao Paulo-based petrochemical company Braskem SA for $1.75 million.

The $1.25 million of 2028 Braskem notes were seen at 98¾ bid, 98 7/8 offered, and the smaller $500 million deal of 2023 notes was seen at 98 7/8 bid, 99 offered.

“They came right around there; they are a little bit off, but Treasuries are weaker, so on spread they are doing just fine,” the trader said.

Proceeds of the Braskem notes will be used to prepay short-term and long-term debt, to fund capital expenditures and for general corporate purposes.

The Latin American market has seen a lot of new paper recently with a good mix of sovereign and corporate debt. Mexico’s newer 2048 notes have been trading a lot since issue earlier this week, as have Brazil’s new 2028 notes, the trader said.

“There’s a ton of new paper, but the market is able to absorb all of this. Many are names that have been in the market before,” the trader said.

Meanwhile, secondary market action is generally muted as riskier assets continue to move higher and volatility remains ultra-low.

On Thursday, the CBOE volatility index dropped to a new low of 9.19, which was down 4.6% on the day.

“Trading volumes, other than new issues, are not great, given this low vol. environment,” a trader said.

In Venezuela credit, the Venezuela 2017 notes which mature in a month’s time, were down, trading around 92¾ bid, 93¼ offered.

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