Emerging markets secondary tightens amid U.S.-China trade hopes

By Rebecca Melvin

New York, Feb. 25 – Spreads on emerging markets debt mostly tightened on Monday as financial markets players cheered news that additional U.S. tariffs on Chinese goods slated to go into effect on March 1 will be delayed.

JPMorgan emerging markets sovereign bond iShares gained 0.25 point on Monday, pushing up to a 109 handle.

U.S. president Donald Trump tweeted on Sunday that substantial progress in bilateral U.S.-China trade talks had been made on such issues as intellectual property protection, technology transfer, agriculture, service and currency. He also said that he is planning to meet with Chinese president Xi Jinping next month if talks continue to go well.

The EM secondary market has been tightening in recent weeks amid lower new issuance volume, but emerging markets players have said that a central focus of investors is what happens with the trade talks, which threaten to torpedo global economic growth if they break down and additional tariffs are slapped on goods in a tit-for-tat fashion. Already the United States has seen such developments as lower prices on beef and chicken products as “a lot of protein is trapped in the country.”

There were no new issue announcements heard on Monday except for China. The primary market for Latin America has been particularly slow, with no new issuance seen last week and no deals on the calendar, although there were rumors that Colombia's Avianca Holdings SA is looking to come to the international bond market. The last time Avianca priced an international bond was in 2014 when it and its subsidiaries Grupo Taca Holdings SA and Avianca Leasing, LLC priced a $250 million reopening of dollar-denominated 8 3/8% notes due 2020. The bond originally priced in May 2013. Avianca is a Bogota, Colombia-based airline holding company.

Also from Colombia, Empresas Publicas de Medellin ESP has issued a call for its $500 million of outstanding 7 5/8% senior notes due July 29, 2019.

The notes will be redeemed on March 27 at par plus any make-whole amount plus accrued interest, according to a notice. The Medellin, Colombia-based entity is a public services company.

Elsewhere, tensions remained high after Venezuelan military forces clashed with Venezuelans at the borders of Brazil and Colombia on Saturday, leaving at least four dead, after forces prevented humanitarian aid from entering the country.

On Monday, Venezuela’s opposition leader Juan Guaido, who is recognized by dozens of countries as the president of Venezuela, was taking part in a meeting with regional members of the Lima Group in Bogota, Colombia.

Guaido said that after Saturday’s events, he is urging the international community to take actions by any means to force President Nicolas Maduro from power. Also taking part in the Monday meeting was U.S. vice president Mike Pence. The Trump administration, which supports Guaido and spearheaded the effort to get aid into the country, announced new sanctions on Maduro allies.

In a speech in Colombia, Pence urged regional partners to freeze oil assets controlled by Maduro, transfer the proceeds to Guaido and restrict visas for Maduro’s inner circle. He said that new U.S. tariffs were being imposed on four pro-government governors.

Maduro claims that the actions on Saturday were justified as humanitarian aid from western countries is being used as a way to give the United States a foothold in the country to drive him from power.

Over the weekend, U.S. Secretary of State Mike Pompeo tweeted that the United States would “take action against those who oppose the peaceful restoration of democracy in Venezuela.”

U.S. persons are prohibited from trading the bonds of Venezuela and state-owned oil company PDVSA since sanctions were imposed at the end of January and the beginning of February.

From Asia, Sun Hung Kai Properties Ltd. priced $500 million 3¾% senior unsecured notes (ratings: A1/A+/), according to company announcement on Monday.

The notes priced under the Sun Hung Kai Properties’ $7 billion medium-term note program. The term for the notes was not immediately known.

Citigroup, HSBC, Mizuho Securities and Standard Chartered were the bookrunners for the notes, which were issued by Sun Hung Kai Properties (Capital Market) Ltd.

Proceeds will be used to fund the company’s general corporate activities.

Joining the forward calendar were two property companies.

Golden Wheel Tiandi Holdings Co. Ltd. plans to price additional notes to be consolidated and form one series with its $200 million of 7% notes due 2021 (B2//B), according to a company announcement.

BOC International, Haitong International, HSBC and Guotai Junan International are joint global coordinators and, together with Founder Securities (Hong Kong) Capital Co. Ltd., Orient Securities (Hong Kong) and Zhongtai International are joint bookrunners and joint lead managers of the proposed Regulation S issue.

Proceeds will be used to fund a tender offer for Golden Wheel’s 2019 dollar notes.

Golden Wheel Tiandi is a Hong Kong-based commercial and residential property developer, owner and operator.

Ronshine China Holdings Ltd. plans to conduct an international offering of dollar-denominated senior notes, according to a company notice.

The company has appointed UBS, Credit Suisse, Bank of China, BOCOM International, CEB International, China International Capital Corp., CLSA, CMB International, CMBC Capital, Central Wealth Securities Investment Ltd., Deutsche Bank, Guotai Junan International, Haitong International and Orient Securities (Hong Kong) as joint lead managers and bookrunners of the Regulation S notes.

Proceeds from the Regulation S offering will be used to refinance existing debt.

Ronshine is a property developer based in Fuzhou, China.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.