Petrobras century deal gets attention; Buenos Aires prices notes; Lima Metro sets roadshow

By Christine Van Dusen

Atlanta, June 2 – Buenos Aires priced new notes on a Tuesday that saw action for the new 100-year issues of notes from Brazil-based Petroleo Brasileiro SA while high-grade bonds from China tightened in response to Treasury rates.

The new deal from Petrobras – $2.5 billion 6.85% notes due 2115 that priced Monday at 81.070 to yield 8.45%, or Treasuries plus 549.3 basis points – made up more than 10% of trading in the high-yield space, with more than $360 million in trading.

That far exceeded any other bonds in that space on Tuesday, a market source said.

For bonds from Asia, “fast-money accounts took this as an opportunity to take profit, and we closed the day unchanged to a couple basis points tighter,” a London-based trader said. “The overall tone still feels defensive, as U.S. Treasuries sold off further, post-London open. But buying interests diminished.”

China-based Cnooc Ltd.’s recent 3½% 10-year notes that priced at 99.075 to yield Treasuries plus 160 bps traded at 144 bps on Tuesday before settling closer to 146 bps, he said.

The $1.5 billion 3¼% notes 2025 that China Petroleum & Chemical Corp. (Sinopec Group) priced at 99.022 to yield Treasuries plus 145 bps traded at 130 bps on Tuesday, he said.

“Bank seniors continued to trade firm,” he said. “Korea closed unchanged, with onshore buying interests in the 10-year bucket.”

And bonds from India were mostly unchanged on Tuesday, with two-way interest in corporate names, he said.

“Malaysia was selectively tighter, with buyers in the recently issued 10-year Malaysia sukuk below par,” he said.

Ukraine sees lower offers

Looking to Ukraine, sovereign bonds have seen slightly lower offers so far this week, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

“But no significant selling,” he said.

The little selling that has occurred has focused on city of Kiev and the 2015 bonds from State Export-Import Bank of Ukraine (Ukreximbank), he said.

Lat-Am in focus

Taking a closer look at Latin America, low-beta spreads finished the session tighter on the day, with Brazil outperforming as it shared in some of Petrobras’ glow, a New York-based trader said.

Five-year credit default swaps spreads for Brazil closed at 235 bps from 240 bps while Mexico’s moved to 118.50 bps from 120 bps.

Other cash prices did weaken on the day, though, he said, amid Treasury weakness.

Venezuela and PDVSA were mixed on the day while Argentina’s bonds moved higher, he said.

Overall, flows were lighter ahead of employment data, he said.

Buenos Aires sells bonds

In its new deal, Buenos Aires sold $500 million 9.95% notes due June 9, 2021 at a yield of 10¼%, a market source said.

The notes were talked at a yield in the mid-10% area.

BNP Paribas and BofA Merrill Lynch were the bookrunners for the Rule 144A and Regulation S deal. Banco de la Provincia de Buenos Aires was the co-manager.

The proceeds will be used to fund social, infrastructure and other public investment projects, as well as to improve the debt maturity profile of the province in Argentina.

Other details were not immediately available on Tuesday.

Latvenergo gives guidance

Latvia’s Latvenergo AS set talk for a €50 million issue of bonds due 2022 at mid-swaps plus 105 bps to 130 bps, according to a company announcement.

The company previously announced plans to issue up to €100 million of green bonds to finance the implementation of environmentally friendly projects, making Latvenergo the first state-owned company in Eastern Europe to enter the capital market with green securities.

Latvenergo has developed and approved its Green Bond Framework, and the company’s environmental objectives have been assessed by the Center for International Climate and Environmental Research – Oslo.

Issuance of the new bonds is expected to take place on June 10.

Latvenergo is the largest power supply merchant in Riga, Latvia.

Lima Metro Line sets roadshow

Peru’s Lima Metro Line 2 Finance Ltd. will set out on Wednesday for a roadshow to market a dollar-denominated issue of notes, a market source said.

Citigroup, Morgan Stanley and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow will begin in New York and travel to Boston, London and Los Angeles before wrapping up with an investor call on June 8.

Lima Metro Line 2 is a government initiative that aims to improve the public transportation infrastructure in Lima.

Gabon plans marketing trip

Gabon has mandated Deutsche Bank, JPMorgan and Standard Chartered Bank as bookrunners for a dollar-denominated issue of benchmark-sized notes that will be marketed during a roadshow, a market source said.

The roadshow begins on Thursday and will be held in Europe and the United States.

Woori Bank to issue notes

Korea’s Woori Bank is looking to Basel III tier one notes (expected rating: Ba2), a market source said.

“We see fair value at 4 7/8% to 5 %,” a London-based trader said.

Other details were not immediately available on Tuesday.

Globo does deal

On Monday, Brazil’s Globo Comunicacao e Participacoes SA, through Pontis III Ltd., sold $325 million 0% secured exchange notes due June 8, 2025 at par to yield Treasuries plus 265 bps, a market source said.

The notes were talked at a spread in the Treasuries plus high-200 bps area.

BofA Merrill Lynch, Itau BBA and Santander were the bookrunners for the Rule 144A and Regulation S deal.

The secured exchange notes include a par call 90 days before the final maturity and will be exchangeable for Globo’s notes due 2025.

The media company has headquarters in Rio de Janeiro.

Stephanie N. Rotondo contributed to this article.

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