La Rioja advances deal; Country Garden, Entre Rios shelve plans; Turkish banks under pressure

By Christine Van Dusen

Atlanta, Nov. 17 – Argentinian province La Rioja braved the uncertain waters of the markets on Thursday and announced it would issue $200 million of notes, even as province Entre Rios canceled plans for a similar issue.

This came against the backdrop of increasing oil inventories and investor concern about what a Donald Trump presidency will mean for the markets.

“U.S. oil inventory increased with a frightening pace,” according to a report from Schildershoven Finance BV. “Volatility risk has increased in the oil market as, on the one side, overproduction remains high, [while] on the other [side] main producers are speculating about a production cut agreement.”

Meanwhile, banks and investors in Turkey are struggling in the current economic and political climate, according to a report from Commerzbank Corporates & Markets.

The “overwhelming mood” is “a sense of pervasive pessimism,” the report said. “Clients expected weaker [lira] exchange rates, eventual rate hikes from the Central Bank of Turkey and declining growth prospects.”

The lira underperformed when other emerging markets currencies rallied, so it is “foolish to expect [the lira] to outperform when sentiment towards EM sours, as is the case at the moment,” the report said. “Given a broadly stronger dollar and surging U.S. inflation expectations, we have to expect broad EM FX weakness in the short term. [The lira] is likely to be the laggard, due to its poor real rate profile relative to its current account deficit.”

In deal-related news, China-based real estate developer Country Garden Holdings Co. Ltd. has canceled plans for dollar-denominated notes due to market conditions, a market source said.

Country Garden postpones plans

The Country Garden notes had been talked at a yield in the 5 5/8% area.

BNP Paribas, BOC International, Goldman Sachs, HSBC and JPMorgan were the bookrunners for the Regulation S deal.

The proceeds were to be used to refinance existing debt and general corporate purposes.

Argentine provinces’ deals

For its upcoming deal, Argentinian province La Rioja is looking to issue $200 million of notes, a market source said.

UBS and Puente Hnos SA are the bookrunners for the deal.

And the Argentine province of Entre Rios has postponed plans for a dollar-denominated issue of notes, a market source said.

Citigroup, HSBC and Santander were the bookrunners for the deal.

A roadshow was held earlier in the month in Boston and New York.

Saudi Arabia dips from reoffer

In trading on Thursday, the new megadeal from Saudi Arabia – a $17.5 billion issue of notes in three tranches due 2021, 2026 and 2046 – received some attention, a trader said.

The $5.5 billion 2 3/8% notes due in 2021 that priced at 99.007 to yield 2.588%, or Treasuries plus 135 basis points, were spotted Thursday at 98 bid, 98.37 offered.

The $5.5 billion 3¼% notes due in 2026 that priced at 98.679 to yield 3.407%, or Treasuries plus 165 bps, traded Thursday at 94¾ bid, 95 offered.

And the $6.5 billion 4½% notes due in 2046 that priced at 98.015 to yield 4.623%, or Treasuries plus 210 bps, were quoted at 95.12 bid, 95.63 on Thursday.

Citigroup, HSBC, JPMorgan, Bank of China, BNP Paribas, Deutsche Bank, Goldman Sachs, MUFG Securities, Morgan Stanley and NCB Capital were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general domestic budgetary purposes.

Kexim sells bonds

On Wednesday, the Export-Import Bank of Korea (Kexim) priced $200 million floating-rate notes due Feb. 23, 2018 at par to yield Libor plus 30 bps, according to a company filing.

Goldman Sachs was the bookrunner for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general operations.

The lender is based in Seoul.

© 2015 Prospect News.
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