Tensions in Russia continue, sending CDS wider; Berau, Paraguay, Greenland Hong Kong hit road

By Christine Van Dusen

Atlanta, July 28 – Several emerging markets issuers – including Singapore’s Berau Capital Resources II Pte. Ltd., Paraguay and China’s Greenland Hong Kong Holdings Ltd. – scheduled roadshows as tensions continued in Russia and Ukraine on an otherwise slow Monday for the asset class.

Credit default swap spreads from Russia were weak on Monday, widening about 9 basis points, a London-based analyst said.

“Corporates are being badly hit,” he said, noting that OAO Lukoil’s short-end was 55 bps wider while Gazprombank’s was 35 bps wider. “Tensions appear to show no sign of dissipating.”

Fueling the tension was word that the European Union is preparing new sanctions while Russia calls for more proof that pro-Russia rebels were responsible for the recent downing of a Malaysian Air flight in Eastern Ukraine.

The sanctions could hit Russian quasi-sovereign banks the hardest, he said.

Looking to Latin America, the bond market was quiet on Monday, a New York-based trader said.

“Quite the ho-hum start to the week, as we left off the same way on Friday as well,” he said.

Brazil-based Petroleo Brasileiro SA (Petrobras) saw its bonds move out by a few basis points amid dwindling liquidity, he said, while banks from Colombia managed to hold on to some gains.

Mexico-based Cemex SAB de CV’s bonds struggled, with fewer sellers, he said. And Brazil-based Vale SA’s notes moved out about 2 bps into the close.

Activity is expected to pick up on Tuesday, the New York trader said, as investors prepare for some economic data announcements from the United States.

Roadshow for Berau

Singapore’s Berau Capital Resources is on a roadshow for an issue of $450 million of notes due in 2019, a market source said.

Barclays, Citigroup and Standard Chartered Bank are the bookrunners for the deal.

The proceeds from the Rule 144A and Regulation S deal will be used to repay and redeem the company’s outstanding 12˝% notes due 2015.

The issuer is a subsidiary of Indonesia-based Berau Coal Energy Tbk, which is based in Jakarta.

Paraguay sets roadshow

Paraguay will set out on Tuesday for a roadshow to market a possible issue of notes, a market source said.

BofA Merrill Lynch and JPMorgan are the bookrunners for the Rule 144A and Regulation S marketing trip.

The roadshow will begin in Los Angeles and London and travel to Boston before concluding on Aug. 1 in New York.

Greenland to market notes

China-based real estate developer Greenland Hong Kong will embark Tuesday on a roadshow to market a dollar-denominated issue of notes, a market source said.

The notes are part of a newly established, $2 billion multicurrency medium-term note program.

Credit Suisse and HSBC are joint global coordinators for the Regulation S deal. Credit Suisse, HSBC, BOC International, JPMorgan and Morgan Stanley are the joint bookrunners.

The proceeds will be used for general corporate purposes, development of domestic projects and repayment of existing debt.

Eastern Property seeks issue

Russia-focused Eastern Property Holdings Ltd. is looking to issue up to $140 million 5˝% notes due in nine years at par, according to a company announcement.

The deal is being led by Valartis Bank AG.

The Swiss-listed company focuses on Russia and other countries in Central and Eastern Europe.

Final book for Kuwait Energy

The final book for Kuwait Energy plc’s new $250 million 9˝% notes due Aug. 4, 2019 was more than $350 million, a market source said.

The notes came to the market at par to yield 9˝% via BofA Merrill Lynch in a Regulation S issue.

About 35% of the orders came from the United Kingdom, 25% from Switzerland, 17% from the Middle East and North Africa, 16% from the rest of Europe and 7% from Asia.

Investment managers picked up 100% of the orders.

The proceeds will be used for debt refinancing, capital expenditures and general corporate purposes.

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