Primary hosts Baidu, Ascott; risk assets rally; Lat-Am tightens a bit; issuers set talk

By Christine Van Dusen

Atlanta, June 23 – China’s Baidu Inc. and Singapore’s Ascott Residence Trust (Ascott REIT) were among the issuers to sell notes on a Tuesday that saw risk assets continue to rally, as investors held on to optimism about the resolution of Greece’s latest financial problems – or ignored the goings-on for the debt-saddled sovereign.

“It seems Greece has been pushed to the back burner for the time being,” a trader said. “Cash prices move around and close around the lows, as Treasury volatility has us adjusting levels all day.”

Bonds from Latin America-focused Pacific Rubiales moved higher on Tuesday, with the 2023s lifted in the Street, a New York-based trader said, as the vote on the takeover bid from Mexico-based Alfa SAB de CV and Harbour Energy Ltd. neared.

In other trading from Latin America, low-beta spreads tightened modestly on Tuesday, with five-year credit default swaps spreads for Brazil closing at 249 basis points from 251 bps, a trader said.

Most names held up “relatively well in the face of the recent back-up in rates,” a New York-based trader said.

Venezuela and PDVSA were part of the up-trade, he said, amid good flows and some better selling of low-beta credit.

Asian notes rallied during the session, with investment-grade names closing 2 bps to 6 bps tighter, a London-based trader said.

“The market raced to short-cover on the hopes of Greece reaching an agreement while real-money demand also returned after the rates sell-off,” he said. “We closed off the tights, with profit-takers in high-beta names.”

China’s Cnooc Ltd. was an outperformer while Korea was “quiet and unchanged,” he said. “India firmed up, with buyers in the short-dated financials, while corporates were mixed, with buyers in selective names. Closed unchanged to 3 bps tighter.”

Issuance from Baidu

In its new deal, China’s Baidu priced a $1.25 billion two-tranche issue of notes due in five and 10 years, according to a company filing.

The $750 million 3% notes due June 30, 2020 priced at 99.866 to yield 3.029%, or Treasuries plus 135 bps. Talk was set in the 140-bps area.

The $500 million 4 1/8% notes due June 30, 2025 priced at 99.830 to yield 4.146%, or 175 bps over Treasuries, following talk in the 180-bps area.

Goldman Sachs and JPMorgan Securities were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general corporate purposes.

“We think the new five-year and 10-year should trade relatively flat to the recent Tencent Holdings five- and 10-year, in line with secondary issues, to account for the one-notch lower difference in Moody’s rating but the more favorable SEC-registered structure,” a trader said.

Ascott REIT sells notes

Singapore’s Ascott REIT sold S$250 million 4.68% perpetual notes at par to yield 4.68%, a market source said.

The notes were issued through trustee DBS Trustee Ltd.

OCBC was the sole bookrunner for the Regulation S deal.

Ascott REIT is a Singapore-based pan-Asian residence real estate investment trust and an associate of Singapore property developer CapitaLand.

Haitong offers guidance

Shanghai’s Haitong Securities Co. Ltd. set talk at 5.15% for a renminbi-denominated issue of benchmark-sized notes due in three years, a market source said.

Haitong International, BOC International and BESI are the bookrunners for the Regulation S deal.

The proceeds will be used for working capital and general corporate purposes.

Kexim guides bonds

Korea Export-Import Bank (Kexim) set talk for a two-tranche issue of dollar-denominated notes due in 5½ years and 11 years, a market source said.

The dollar benchmark notes due in 5½ years were talked at a spread in the Treasuries plus 100 bps area.

The tap of the company’s 3¼% dollar notes due in August of 2026 was talked at a spread of Treasuries plus 95 bps to 100 bps. The deal’s original size was $500 million.

Credit Agricole, Credit Suisse, Goldman Sachs, HSBC, JPMorgan, Mizuho Securities and Morgan Stanley are the bookrunners for the SEC-registered deal. KDB Daewoo Securities is a joint lead manager, according to a company filing.

The proceeds will be used for general operations, including extending foreign currency loans, and for the repayment of maturing debt.

“We see fair-value for the new Kexim 5½-year at z-spread plus 75 bps bid,” a trader said. “Initial price talk of Treasuries plus 110 bps on the Kexim 2026 tap looks relatively attractive versus current market pricing.”

China Overseas plans roadshow

China Overseas Land & Investment Ltd. will set out on Wednesday for a roadshow to market a euro-denominated issue of notes, a market source said.

Agricultural Bank of China, BNP Paribas, DBS Bank, HSBC and ICBC are the joint global coordinators and – along with JPMorgan and UBS – the joint bookrunners for the Regulation S deal.

The roadshow will be held in Asia and Europe.

China Overseas is a Hong Kong-based construction and development company.

Bank of China deal ahead

Bank of China Ltd. will hold conference calls on Wednesday to market a multi-tranche, multi-currency issue of notes, a market source said.

The notes could be denominated in dollars, renminbi, euros and Singapore dollars.

Bank of China, Barclays, Citigroup, DBS Bank and HSBC are joint global coordinators, joint lead managers and joint bookrunners for the Regulation S deal.

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