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Morning Commentary: Russia bonds heavy; new Egypt tranches edge par; focus shifts to Saudi Arabia
By Rebecca Melvin
New York, April 10 – Russia’s emerging markets bonds were very heavy in the early going on Tuesday in continuation of Monday’s pain after the U.S. Treasury sanctioned seven Russian oligarchs, 12 companies that they control and 17 senior government officials at the end of last week.
Five-year credit default swaps for the sovereign were trading at 151 basis points, according to a London-based trading source.
Meanwhile the new Egypt 2026 notes were quoted 100.25 bid, 100.5 offered toward the end of London’s session, and the new Egypt 2030 notes were 100.25 bid, 100.40 offered.
Meanwhile in the Middle East and Africa region, most of the day’s focus shifted to Saudi Arabia, which announced a new triple-tranche offering on Tuesday with pricing set late in the day. The initial price talk for its planned seven-, 12- and 31-year dollar benchmarks of notes is for a yield spread for the 2025 notes in the U.S. Treasuries plus 170 basis points area; for the 2030 notes, at Treasuries plus 200 bps; and for the 2049 notes, at Treasuries plus 235 bps.
In MENA, “it’s all about [Saudi Arabia] coming back with a three-tranche deal. The book is already over $30 billion I hear for it.”
For Asia, China’s CK Hutchison Holdings Ltd. priced €1.25 billion of notes in two tranches of seven and 12 years (expected ratings: A2/A-/A-).
The €750 million tranche of seven-year notes priced to yield mid-swaps plus 68 basis points, which was trimmed from guidance in the area of mid-swaps plus 70 bps and initial price talk in the mid-swaps plus 80 bps area. The deal sized was at the larger end of expectations for a €500 million to €750 million deal.
The €500 million tranche of 12-year notes priced to yield mid-swaps plus 93 bps, which was trimmed from guidance in the area of mid-swaps plus 95 bps and initial price talk in the area of mid-swaps plus 100 bps.
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