Cambridge Industrial Trust and Baosteel Resources plan roadshows; spreads widen

By Christine Van Dusen

Atlanta, Jan. 16 – Singapore’s Cambridge Industrial Trust and China’s Baosteel Resources International Co. Ltd. set roadshows for upcoming deals on a Friday that saw spreads widen to end a volatile week for emerging markets assets.

“Market volatility continued and, once again, extended to emerging markets, with benchmark low-beta credit default swaps spreads moving 10 basis points to 15 bps wider,” a London-based trader said. “Corporates were well-offered across the board, as Latin American economies face increasingly lower commodity prices. Copper hit record lows midweek as Chinese consumption slowed before bouncing back on Thursday and are now 23% down over the last 12 months.”

Brazil-based Petroleo Brasileiro SA moved about 5 bps wider, a New York-based trader said, while Brazil’s Vale SA was well offered and a touch wider after hitting all-time wides on Thursday.

“Clients seem to be slowly become better sellers, adding to the current malaise,” he said. “Codelco still is holding its wider spreads from Wednesday, after the World Bank forecasts for global growth were adjusted, sending copper to 12-year lows. Clients were in front of the move, as they have been better sellers for at least the last two weeks.”

Mexican petrochemical company bonds weakened as oil prices remained in focus. On Friday, they ended up flat to Monday.

“We expect the larger market for Latin American corporates to be under pressure for the next few months,” the London trader said. “There is a true lack of conviction in the market.”

From the Middle East, bonds moved slightly wider on the Treasury move, a trader said, and investors remained interested in Abu Dhabi’s Etisalat.

China property bonds struggle

Asian credits were weaker on Friday morning following the news that Chinese authorities had blocked China Overseas Land & Investment Co. from selling property in Shenzhen. The reasons were not disclosed, but industry-watchers worry that the company is getting tangled up in the anti-corruption scandal that has hurt Kaisa Group Holdings Ltd.

“China high-grade property traded off 20 bps to 30 bps,” a trader said. “The rest of the high-grade space was 5 bps to 10 bps wider.”

Huarong notes widen

The new issue of notes from China-based Huarong Asset Management Co. Ltd. – $3.2 billion in three tranches due 2018, 2020 and 2025 – was wider on Friday.

The $1.2 billion notes due 2020 priced that at Treasuries plus 310 bps and the $1.4 billion notes due 2025 that priced at Treasuries plus 360 bps both widened by about 10 bps with good two-way flow, a trader said.

The deal also included $600 million three-year notes that priced at Treasuries plus 270 bps.

Credit Suisse, Standard Chartered Bank and Wing Lung Bank were the joint global coordinators. ABC International, BOC International, Bocom International, CCB International, China Merchants Securities, Citigroup, Credit Suisse, DBS Bank, Deutsche Bank, HSBC, ICBC, Jefferies, Morgan Stanley, Standard Chartered Bank and Wing Lung Bank were the joint bookrunners and joint lead managers for the Regulation S deal.

Philippines curve rises

Among Asian sovereigns, the long end of the Philippines’ curve was up 1½ points, while the belly of the curve was up ¾ point, a trader said.

Indonesia’s 2040s were seen at 106 bid, 106½ offered.

“Indonesia’s curve lagged, with the belly up ¼ point to ½ point,” he said. “The long end was up a ½ point, with the new 30-year notes outperforming.”

The 30-year notes traded Friday at 103 bid, 103½, beating the recent high of 102½.

Pacific Rubiales in focus

From Latin America, Colombia-focused Pacific Rubiales Energy Corp. remained somewhat active on Friday, a trader said.

The company is grappling with investor concern that the declining price of oil could cause Pacific Rubiales to break a rule – specifying its debt not exceed 3½ times its 12-month trailing earnings before interest, taxes, depreciation and amortization – and hamstring its efforts to boost production.

“We are not as specifically concerned about a potential covenant breach as we are with the fundamental credit deterioration and value destruction following an extended period of [low oil prices],” he said. “Should the company in fact breach these covenants, a waiver would likely be available.”

Russia, Turkey get attention

Looking to Russia, investors awaited Standard & Poor’s decision about whether to downgrade the sovereign’s rating, a trader said.

“Our view remains that a downgrade is the more likely outcome,” he said.

From Turkey, Akbank TAS’ new issue received some attention on Friday. The lender priced $500 million 4% notes due 2020 at 99.664 to yield 4.075%, or mid-swaps plus 270 bps, via Barclays, Citigroup, Goldman Sachs, ING, Mizuho Securities and Standard Chartered Bank.

“The bond was trading 4 bps wider, first thing, but has rebounded to trade slightly tight of reoffer,” he said.

Swiss news hits Hungary

Looking to Hungary, bonds were affected by the recent news that the Swiss Central Bank is ending its cap against the euro, which led to a strong appreciation of the franc.

“Investors [in Hungarian bonds were] concerned by the exposure of households and banks to Swiss franc loans,” a trader said. “Nonetheless, those fears calmed later in the day, with bonds largely retracing the move.”

Poland, which also has franc-denominated loan exposure, did not see much change in sovereign bonds on Friday.

“This morning, spreads were generally a little wider on the Treasury move,” he said.

Singapore trust sets roadshow

Singapore’s Cambridge Industrial Trust – through subsidiary Cambridge-MTN Pte. Ltd. – will set out on Monday for a roadshow to market a Singapore dollar-denominated issue of notes, a market source said.

RBS is the bookrunner for the Regulation S deal.

The issuer is a Singapore-based real estate investment trust.

Roadshow for Baosteel

China’s Baosteel on Monday will commence a roadshow to market a dollar-denominated issue of notes, a market source said.

Deutsche Bank and Standard Chartered Bank are the joint global coordinators. Deutsche Bank, Standard Chartered Bank, ANZ, Bank of China, DBS Bank and HSBC are the joint bookrunners and joint lead managers.

The roadshow will be held in Hong Kong and Singapore. A Regulation S issue is expected to follow.

The issuer is a Shanghai-based and state-owned iron and steel company.

© 2015 Prospect News.
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