Asian bonds soften; Bluestar sees support; Woori Bank rebounds; Pacific Rubiales in news

By Christine Van Dusen

Atlanta, June 5 – Risk sentiment remained cagey on Friday amid continued rate volatility, with high-grade cash bonds from Asia widening slightly.

“The rally in U.S. Treasuries kept accounts sidelined while we had some selling in recent issues,” a source said.

Among those new issues was a re-pricing by Chaoyang-based chemical product manufacturer China National Bluestar Group Co. Ltd., which in May sold $1 billion in two tranches but on Thursday tried again due to a “contractual oversight,” a market source said.

The $500 million 3½% notes due in 2018 that had priced at a spread of Treasuries plus 220 basis points re-priced at 99.893 to yield 3.538%, or Treasuries plus 250 bps. On Friday the notes moved to a tight of 272 bps before moving to 288 bps and closing the Asian session at 298 bps bid, 284 bps offered, the trader said.

The $500 million 4 3/8% notes due in 2020 that priced at Treasuries plus 235 bps re-priced at par to yield 4 3/8%, or Treasuries plus 270 bps.

“The five-year was better supported, with bonds reaching tights of 248 bps and closing at 260 bps bid, 255 bps offered,” he said.

Deutsche Bank, Morgan Stanley and BOC International were the joint global coordinators and – along with JPMorgan and BNP Paribas – the joint bookrunners and joint lead managers for the Regulation S deal.

The new issue from Korea’s Woori Bank – 5% Basel III tier 1 notes due in 2045 that priced at par to yield 5% on Wednesday – hit a low of 98½ on Friday before rebounding to close, a trader said.

“Last seen at 98 7/8 bid, 99 1/8 offered,” he said.

China oil bonds widen

Oil and gas bonds from China, meanwhile, moved 1 bp to 2 bps wider on Friday while senior notes from banks were a “touch softer but generally stable,” the trader said.

“Korea and Malaysia pulled back after the U.S. Treasury rally, with the 10-year bucket a couple bps wider,” he said. “India is a mixed bag.”

In other trading into the end of the week, sovereign bonds from Ukraine moved “a bit lower” after a “buying spree” at mid-week, said Fyodor Bagnenko, a fixed-income trader at Dragon Capital.

Quasi-sovereign banks saw two-way flows, he said.

Egypt draws orders, trades

The new issue of 5 7/8% notes due 20125 that Egypt priced on Thursday at 99.070 to yield 369.10 bps received some attention in trading on Friday.

The final book was $4.5 billion for the sovereign’s first deal since 2010, a trader said.

On Friday, the new notes were seen at 100½ before trading closer to 100¼ bid, 100.45 offered, he said.

Pacific Rubiales in focus

In other news, Latin America-focused Pacific Rubiales Energy Corp. was back in focus on Friday after 90% of note holders consented to a takeover plan by Mexico-based Alfa SAB de CV and Harbour Energy Ltd.

Previously, a group of investors from Venezuela who represented a 19½% stake in Pacific Rubiales was in the news for opposing the deal.

“The news of 90% of holders consenting should have a minimal impact on the bonds,” a trader said. “The Alfa deal was and is conditional upon the required consent, but it is one less hurdle that must be cleared.”

© 2015 Prospect News.
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