Primary hosts Beijing Infrastructure Investment deal; spreads widen; funds see inflows

By Christine Van Dusen

Atlanta, June 20 – China’s Beijing Infrastructure Investment (Hong Kong) Ltd. sold notes and, after weeks of strength, emerging markets assets weakened as investors kept an eye on the conflict in Iraq.

“The situation in Eastern Ukraine also remains tense, with continued fighting,” a London-based analyst said. “Overall, however, the moves wider were not substantial this week.”

She also noted that emerging markets bond funds saw inflows during the week, totaling about $620 million.

In trading on Friday, the new notes from Kenya traded well, as did the new issue of 5.162% notes due in five years from Turkey’s Kuveyt Turk Katilim Bankasi AS.

The latter deal tightened about 18 basis points by Friday, a trader said. The Islamic bonds came to the market on Thursday at par to yield 5.162%, or mid-swaps plus 340 bps, following talk in the mid-swaps plus 375 bps area.

Standard Chartered Bank, Citigroup, Emirates NBD Capital, HSBC and KFH Investment were the bookrunners for the Regulation S deal.

“But Turkish banks were 9 bps wider on average,” the trader said. “The clear underperformer was [Turkey’s Turkiye Finans Katilim Bankasi AS] as investors made way for the new Kuveyt Turk.”

Meanwhile, the new 5% bond due in 2021 that Turkiye Is Bankasi AS (Isbank) priced Wednesday at 98.689 to yield mid-swaps plus 295 bps traded relatively flat, in spread terms on Thursday.

The notes priced tighter than talk, initially set in the 320 bps area.

Barclays, Citigroup, HSBC, National Bank of Abu Dhabi and RBS were the bookrunners for the deal.

In deal-related news, China City Construction (International) Co. Ltd. and China’s Greenland Holding Group Co. Ltd. set roadshows.

Ziraat Bank deal ahead

The trader also was watching out for the upcoming issue of notes from Turkey’s Turkiye Cumhuriyeti Ziraat Bankasy AS (Ziraat Bank). The lender is on a roadshow for a dollar-denominated issue of benchmark-sized notes with BofA Merrill Lynch, Citigroup, Deutsche Bank, HSBC and JPMorgan in a Rule 144A and Regulation S offering.

“We expect that deal to be well received,” she said.

Russian issues in focus

In other trading, banking bonds from Russia put in a strong week, particularly short-dated notes, a trader said.

But Gazprombank OJSC was among the weakest performers.

Russia-based Metalloinvest JSC’s 2016 bond was the “strongest mover,” the trader said, on news that the company could sell a portion of its stake in Norilsk Nickel.

“Gazprom was generally weaker – the ‘16s were 14 bps wider – affected by ongoing tensions in Ukraine,” the trader said.

Middle East widens

Looking to the Middle East, most names were a bit wider by the end of the week, a trader said.

Qatar Islamic Bank was the standout, with its 2017s tightening 11 bps by Friday.

But Emirates NBD’s perpetuals widened 25 bps and Dubai Islamic Bank’s perpetuals widened 22 bps.

“Corporate bonds were 3 bps wider on average,” she said. “Bahrain and Dubai sovereign paper were generally under pressure as well.”

Chinese corporate prints bonds

In its new deal, China’s Beijing Infrastructure Investment priced an RMB 1.2 billion issue of 3¾% notes due June 27, 2017 at par to yield 3¾%, a market source said.

RBS, Wing Lung Bank, ICBC Asia and ICBC International were the bookrunners for the Regulation S deal.

The proceeds will be used primarily for the development of the railway transit system in Beijing, as well as for working capital and general corporate purposes.

Roadshow ahead

China City Construction will set out on Monday on a roadshow to market a renminbi-denominated issue of notes, a market source said.

BNP Paribas, BofA Merrill Lynch and BOC International are the bookrunners for the Regulation S deal.

The roadshow will be held in Hong Kong and Singapore.

The issuer is a Beijing-based construction services company.

Marketing trip planned

China’s Greenland Holding Group will commence a roadshow on Monday for a dollar-denominated issue of notes, a market source said.

BOC International, HSBC, JPMorgan and Deutsche Bank are the bookrunners for the Regulation S deal.

The notes will be issued by wholly owned subsidiary Greenland Global Investment Ltd and guaranteed by the company.

The company is a real estate development and operation services company, based in Shanghai.

Odebrecht sells notes

On Thursday, Brazil’s Odebrecht Finance Ltd. priced $500 million 5¼% notes due June 27, 2029 at par to yield 5¼%, a market source said.

Santander, Citigroup, Deutsche Bank, Itau Unibanco, JPMorgan, Mitsubishi UFJ Securities were the bookrunners for the deal.

The new notes were part of a tender offer for Odebrecht’s 7% senior notes due 2020, 5 1/8% notes due 2022, 6% notes due 2023 and 4 3/8% notes due 2025 that began Thursday.

The issuer is an affiliate of Construtora Norberto Odebrecht, an engineering and construction company based in Sao Paulo.

© 2015 Prospect News.
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