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.

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.

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.”

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