National Bank of Abu Dhabi sells bonds; investors skeptical about Pacific Rubiales takeover

By Christine Van Dusen

Atlanta, June 10 – National Bank of Abu Dhabi PJSC sold notes on Wednesday during another mixed session, driven by moves in U.S. Treasury rates.

Asian bonds saw solid demand from real-money accounts on Wednesday, with high-grade names closing the session 1 basis point to 3 bps tighter and recent underperformers bouncing back, a London-based trader said.

“The China oil complex is a couple tighter but not seeing much demand,” he said. “China bank seniors remained firm while LT2s were mixed.”

The new issue of notes from Korea Hydro & Nuclear Power Co., Ltd. – $300 million 3¼% notes due 2025 that priced at 99.24 to yield 2 1/8%, or Treasuries plus 95 bps – was well-bid on Wednesday, he said.

The bonds were spotted at 92 and 91 before closing the Asian session at 93 bid, 90 offered.

“Woori Bank’s 2024 held firm,” he said. “Malaysia was unchanged to 2 bps tighter, with sellers into the rally.”

And bonds from India weakened amid some selling, moving 3 bps to 5 bps wider, he said.

Greece was on radar screens on Wednesday after the European Commission rejected the sovereign’s new proposal for repaying its debt, which doesn’t match up with the proposal submitted by its international creditors.

“The issue will continue to put pressure on the European debt market,” according to a report from Schildershoven Finance BV. “We think the correction may continue and recommend that investors wait, as they will have the opportunity to purchase bonds at more attractive levels.”

Ukraine sovereigns move lower

Taking a look at Ukraine, sovereign bonds so far this week have moved slightly lower, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

Some paper came out following reports that the International Monetary Fund could still lend to Ukraine if creditors don’t get paid, he said.

“Could be viewed as the green light for a debt moratorium,” he said.

Most of the trading has focused on the sovereign’s 2017s and 2022s, and some profit-taking was seen for bank bonds. Corporates, he said, have been inactive.

Lat-Am wider but resilient

From Latin America, low-beta spreads finished the day slightly wider but stayed resilient “in the face of a global rout on rates,” a New York-based trader said.

Five-year credit default swaps spreads for Brazil closed at 248.50 bps from Tuesday’s 246 bps while Mexico’s moved to 131 bps from 130.50 bps, he said.

Cash prices continued to decline as a sell-off in Treasuries picked up, he said.

Venezuela and PDVSA bonds rallied while Argentina’s notes dipped.

Lat-Am corporates weaken

On the corporate side for Latin America, bonds opened weaker and ended that way on Wednesday, another New York-based trader said.

Liquidity was thin and weakness prevailed for high-grade names from Chile, which said a lot about the state of the market, he said.

“That group is usually the last to trade markedly lower,” he said.

Meanwhile, high-grade corporates from Brazil were quiet but saw better offers, he said.

Pacific Rubiales in the news

Latin America-focused Pacific Rubiales was once again in the news, this time after the company filed a management information circular and released a letter to shareholders ahead of a special meeting about the acquisition planned by Mexico-based Alfa SAB de CV and Harbour Energy Ltd.

“If management needs to remind shareholders of the merits of the proposed transaction, it tells me that perhaps the message isn’t getting through,” a London-based trader said. “Pacific Rubiales futures are up since the news was released, so maybe the market thinks this kind of communication will help, but then again the current offer from Alfa represents at 15% premium above the current share price.”

The trader calls the transaction “attractive,” even as oil prices are rising.

“These are prices that Pacific Rubiales might not be able to sell into by early next year,” he said. “Without a substantial amount of new investment, the story could look drastically different by this time next year.”

The company’s bonds reflected growing skepticism about the deal, he said.

“High yield is not a sought-after asset class at the moment, and Pacific Rubiales bonds do have some downside if one believes a deal is not getting done,” he said.

Shanshui notes fall

China Shanshui Cement Group received some attention on Wednesday after the cement company said its legal action against a major shareholders has taken a toll.

“These legal proceedings resulted in the suspension of the outstanding credit facilities by banks and shortened credit periods by suppliers,” Schildershoven said in a report.

In response, China Shanshui’s 2020 bonds fell 8%, the report said.

NBAD prints new bonds

Abu Dhabi-based lender NBAD priced its $750 million issue of 5¼% perpetual notes at par to yield 5¼%, or mid-swaps plus 335 bps, a market source said.

Citigroup, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Societe Generale CIB were the bookrunners for the Regulation S deal.

Haikou Airport draws orders

China-based Haikou Meilan International Airport Investment Ltd.’s new RMB 600 million 7¼% notes due June 18, 2018 that priced at par to yield 7¼% on Tuesday drew a final order book of RMB 1.4 billion from more than 40 accounts, a market source said.

The notes were talked at a yield in the 7½% area.

Societe Generale CIB was sole global coordinator, and ABC International and Shanghai Pudong Development Bank were the other joint bookrunners for the deal.

About 92% of the orders came from Hong Kong and Singapore and 8% other countries, with 38% taken up by asset and fund managers, 32% from banks and 30% from private banks.

The proceeds will be used for general corporate purposes.

On Wednesday, the notes were seen trading at 100 1/8 bid, 100 3/8, a trader said.

© 2015 Prospect News.
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