Rough day for EM bonds; most names widen on Treasury moves; Yunnan Energy prints notes

By Christine Van Dusen

Atlanta, Oct. 15 – China’s Yunnan Energy Investment (Overseas) Co. Ltd. sold notes on a brutal Wednesday, with spread-based credits taking a beating after economic data from the United States sent Treasuries plummeting.

September retail sales in the United States fell more than expected, and Treasuries printed as low as 1.86% on Wednesday, causing bonds to make “massive moves not sighted since the expansion of quantitative easing by the Fed to include U.S. Treasuries in 2009,” a London-based trader said.

This – plus a poor global tone and worries about Ebola – sent most emerging markets assets wider during the session.

Though some lower-beta names and long-dated assets from the Middle East attempted to keep up with the rates moves, “it was a hopeless task,” the trader said.

Bahrain’s 2044s traded at z-spread plus 315 basis points on Wednesday, after trading as tight as 272 bps, he said.

And Dubai’s Damac Real Estate Development Ltd. saw its notes due in 2019 close at 95 on the bid side after pricing in March at par.

“That’s the best part of 60 bps wider on the session, or over 100 bps wider on the month,” he said. “Liquidity is generally pretty poor, with bonds gapping around. For those trading on spread, a very painful day.

Looking to Latin America, banks managed to outperform other assets on Wednesday, a New York-based trader said, but overall there was quite a bit of widening.

Buyers were spotted late in the day, with names like Latvia, Lithuania and Poland moving higher with rates, the London trader said.

Serbia, meanwhile, saw its bonds remain unchanged on Wednesday.

Credit default swaps spreads started out mixed, then widened out significantly, with Russia’s moving out 1 bp at the open before closing wider by 13 bps.

Turkey’s five-year CDS started the day narrower by 4 bps but finished wider by 3 bps, he said.

Issuance from Yunnan Energy

China’s Yunnan Energy sold RMB 600 million 5½% notes due in 2017 at 99.727 to yield 5.6%, a market source said.

The notes were talked at a yield of 5½% to 5.6%.

Guotai Junan International was the sole global coordinator, joint lead manager and joint bookrunner for the Regulation S deal. ABC and Huatai Financial were the joint lead managers and joint bookrunners.

The issuer is a subsidiary of Yunnan Provincial Energy Investment Group Co. Ltd., a Kumming, China-based developer of wind projects.

Woori Bank prints notes

On Tuesday, South Korea’s Woori Bank printed RMB 200 million notes due in 2016 with a 3.87% coupon, a market source said.

No other pricing details were immediately available on Wednesday.

Commerzbank, Deutsche Bank, HSBC, Nomura Securities and Standard Chartered Bank were the bookrunners for the deal.

The issuer is a Seoul, South Korea-based lender.

© 2015 Prospect News.
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