Ethiopia, Chalco bring new deals; Russia, Ukraine in focus; Kuwait Projects outperforms

By Christine Van Dusen

Atlanta, Dec. 4 – Ethiopia and Aluminum Corp. of China Ltd. (Chalco) sold bonds on a moderately active Thursday for emerging markets assets.

Notes from Russia declined into Thursday as investors showed concern over the sovereign’s economic health. That hit credit default swaps spreads, a trader said.

Likewise, bonds from Ukraine have so far this week declined, said Svitlana Rusakova of Dragon Capital.

“The damage suffered by Ukrainian bonds was tangible though – the sovereign came down by 1 point,” she said. “Quasi-sovereigns followed suit.”

Bonds from the Middle East faded as the session went on, a London-based trader said.

He was active in notes from Dubai-based DPWorld and Etisalat, as well as Bahrain.

“Bahrain is 25 bps to 28 bps wider on the week now, however, the one ray of light is some support on the 2022s in the past two sessions,” he said.

Dubai’s Damac Real Estate Development Ltd. and Dar al-Arkan Holdings widened on the week, moving out between 35 bps and 60 bps, he said.

“They both definitely score a ‘D’ on their report card this week,” he said. “Kuwait has obviously retraced as well.”

Perpetual notes from the Middle East were quiet, he said, though Abu Dhabi Islamic Bank saw its bonds traded in “fair size” at 104½.

The best-performing bond of the week, so far, is Kuwait Projects Co.’s 2019s, which tightened 25 bps.

“Laggard of the week? Kuwait Energy’s 2019s,” he said, blaming the change in oil prices.

Ethiopia prices notes

In its new deal, Ethiopia priced an upsized $1 billion issue of 10-year notes at a yield of 6 5/8%, a market source said.

The notes – initially expected to total $500 million – were talked at a yield in the 6¾% area.

Deutsche Bank and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Other details were not immediately available on Thursday.

Chalco sells bonds

Also on Thursday, Beijing-based metals manufacturer Chalco priced $500 million 3 5/8% notes due Dec. 11, 2019 at 99.534, a market source said.

Bank of China, HSBC, JPMorgan and Standard Chartered were the bookrunners for the deal.

Issuance from Cagamas

On Wednesday, Malaysia’s Cagamas Bhd. priced $500 million 2.745% notes due Dec. 10, 2019 at par to yield 2.745%, a market source said.

CIMB, HSBC, RHB Bank and Standard Chartered were the bookrunners for the deal.

Cagamas is a mortgage company based in Kuala Lumpur.

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