Boubyan sells bonds; EM rallies on oil, Chinese data; Brazil stands out; Mubadala sees action

By Christine Van Dusen

Atlanta, May 10 – Kuwait’s Boubyan Bank KSCP sold bonds on Tuesday as oil prices began to recover and China released supportive economic data, leading risk assets to rally.

“Flows saw better sellers for the most part, as it seems accounts try and lock in some gains after this move tighter and higher,” a New York-based trader said. “The price action in emerging markets credit today was a bit surprising, as the market was unable to make a move higher in cash bonds. It appears that real money is holding onto bonds and in some cases selling, and buyers are becoming a bit scarce as we look for a catalyst to take us higher.”

Emerging markets assets received support from higher oil prices – $44 per barrel for Brent and $43.70 per barrel for WTI – that stemmed from wildfires in Canada. The rampant wildfires, though tragic, were expected to help alleviate some the oversupply in oil.

“While the Canadian wildfire remains the major short-term driver, we think that the reshuffle at Saudi Arabia’s oil ministry could change the medium-term picture, as it has become less clear whether Saudi Arabia will join a freeze agreement,” a London-based strategist said. “This morning, [the Saudi Arabian Oil Co., or Saudi Aramco] CEO announced significant growth in output this year, driven by a capacity boost of 33% at its Shaybah oil field and further international expansion.”

From Brazil, the speaker of the lower house of Brazil’s congress first announced the annulment of President Rousseff’s April impeachment, then reversed his decision on Tuesday.

“This comes just ahead of a vote in Senate scheduled for tomorrow, which would see President Rousseff stepping down for 180 days and stand trial if the motion went ahead,” the strategist said. “The head of Senate has announced [a] go-ahead with the impeachment vote nonetheless.”

Brazil’s spreads outperform

In response, Brazil's spreads outperformed by a wide margin, a New York-based trader said.

Five-year credit default swaps spreads for the sovereign tightened to 335 basis points from 350 bps, while Mexico’s moved to 165 bps from 168.5 bps.

“Cash prices away from Brazil lag in a big way today, and were well-offered across almost all names,” he said. “Lat-Am high yield is mostly unchanged on the day, despite the big rally seen in risk assets.”

Venezuela’s 2027s finished Tuesday at 41.75 from 41.50, PDVSA’s 2017s closed at 57.70 from 57.25, and Argentina’s 2024s were unchanged at 109.40. The latter sovereign’s new 2026s were a bit lower, trading at 101.80 from 101.90, he said.

Mubadala trades

Abu Dhabi-based holding company Mubadala Development Co.’s new issue of $500 million 2¾% notes due 2023 that priced Monday at 99.332 to yield 2.856%, or mid-swaps plus 150 bps, saw some activity in trading on Tuesday.

During the morning in New York the notes were quoted at par bid, 100.15 offered.

The Rule 144A and Regulation S deal – which came tight to initial talk, set at mid-swaps plus 170 bps – was led by BofA Merrill Lynch, BNP Paribas, First Gulf Bank, JPMorgan, MUFG Securities and Societe Generale.

“Active day from the word ‘go,’” a London-based trader said.

The notes closed Tuesday at 99.90 bid, 99.95 offered, “slightly off the high prints I saw first thing,” he said. “Net-net, it’s performed well. Ultimately the issuer had a huge book, is not a frequent issuer, had $750 million mature last month. And it’s of huge, vital and strategic importance to Abu Dhabi.”

ABC attracts orders

The new two-tranche issue of $1.25 billion notes from Agricultural Bank of China drew a total final order book of $2.99 billion in orders, a market source said.

The Regulation S deal included $400 million 1 7/8% notes due 2019 that priced at 99.814 to yield Treasuries plus 107.5 bps, which saw $990 million in orders from 73 accounts.

The notes were quoted in the secondary market at 119 bps bid, 117 bps offered.

The $850 million floating-rate notes due 2019 that priced at par to yield Libor plus 98 bps drew an order book totaling $2 billion from 57 accounts. The notes were seen trading at 100.29 bid, 100.35 offered.

ABC International, BofA Merrill Lynch, Citigroup, Morgan Stanley and Wells Fargo Securities were the joint global coordinators and bookrunners. Credit Agricole CIB and Standard Chartered Bank were the co-managers.

The lender is based in Beijing.

Latvia seeks issuance

Latvia is looking to print a benchmark-sized issue of euro-denominated notes, according to an announcement from the sovereign.

HSBC, JPMorgan, Natixis Securities and Swedbank are the bookrunners for the deal.

Other details were not immediately available on Tuesday.

Boubyan sells bonds

In its new deal, Kuwait’s Boubyan Bank priced a $250 million issue of 6¾% perpetual notes at par to yield 6¾%, a market source said.

Boubyan Capital, HSBC and Standard Chartered Bank were joint global coordinators for the Regulation S sukuk. Boubyan Capital, Dubai Islamic Bank, Emirates NBD Capital, HSBC, KFH Capital, National Bank of Kuwait and Standard Chartered Bank were joint lead managers and bookrunners.

The Islamic lender is based in Kuwait City.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.