Asian issuers set roadshows; EM weakens ahead of Fed, Brexit decision; Lat-Am names decline

By Christine Van Dusen

Atlanta, June 13 – Several Asian issuers – including Indonesia and South Korea’s KT Corp. – advanced deals on a weaker Monday for emerging markets bonds, as investors awaited the Federal Reserve’s meeting and the United Kingdom’s decision on whether to remain in the European Union.

“Another weak session for global risk assets, as looming upcoming events continue to hang over markets,” a trader said.

Latin American corporate bonds were very quiet on Monday morning, with “some credits stuck in neutral,” a New York-based trader said.

Others, like Mexico-based Cemex SAB de CV and Brazil-based Vale SA, moved lower on little volume and inquiry.

“Mexican high-grade and banks, which have traded well, even when we began to turn left late last week, certainly don’t feel better offered, but bids are pulled back,” he said.

Concerns about “diminishing global growth” are weighing on the curve, he said.

“The new issue pipeline has seemed to go cold after perking up the last three weeks, with varying degrees of performance among those recently issued,” he said.

Argentina’s new issue of notes due in 2026 was at first an outperformer, then closed lower, finishing the day at 104.90 from 105.25.

“Most Chile high-grade continues to trade well on price, with Treasury yields helping their cause,” he said. “Brazil corporates are trading mostly credit-specific.”

At the end of the day, Brazil’s five-year credit default swaps spreads closed at 354 basis points from 348 bps, while Mexico’s moved to 174 bps from 169 bps.

“Cash prices are only down a touch, as a lack of volume and the U.S. Treasury rally keeps levels in check,” he said. “Latin American high yield also weakens on the day, with both Venezuela and Argentina moving lower.”

PDVSA, Argentina dip

Indeed, PDVSA’s 2017s closed at 67.75 from 68, Venezuela’s 2027s finished at 43.75 from 44 and Argentina’s 2024s finished at 112 from 112.50, the New York trader said.

“Flows were extremely light for the session, with small two-way inquiries,” he said.

MTN Group eyed

South Africa-based telecommunications company MTN Group Ltd. was in the news on Monday after agreeing to pay Nigeria the equivalent of $1.7 billion over three years after the company did not disconnect upwards of 5 million incompletely registered subscribers.

The company also said it would soon list its shares on the Nigerian Stock Exchange.

In response, the company’s 2024 dollar notes tightened, moving off Friday’s high print but still trading at about 96˝ mid, a trader said.

Meanwhile, sovereign bonds from South Africa were “having a pause here, having had a solid eight to nine days, basically since the Thursday prior to the Friday late ratings announcement,” he said.

The 2019s and 2020s have been in demand, he said.

ABC Leasing sets talk

China’s Agricultural Bank of China Financial Leasing Co. Ltd. set talk for a dollar-denominated issue of benchmark-sized notes due in five years in the Treasuries plus 150 bps area, a market source said.

ABC International, Agricultural Bank of China and CICC HK Securities are the joint global coordinators, bookrunners and lead managers. ANZ, DBS Bank and Wells Fargo Securities are the bookrunners for the Regulation S deal.

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

Agricultural Bank of China is based in Beijing.

Indonesia guides bonds

Indonesia set talk for a two-tranche issue of samurai bonds due in three and five years, a market source said.

The three-year notes were talked at 95 bps over the benchmark yen swap rate.

The five-year notes were talked at 125 bps over yen swaps.

Mitsubishi UFJ, Morgan Stanley, Mizuho Securities and SMBC Nikko are the bookrunners for the deal.

The proceeds will be used to finance the budget deficit.

KT plans roadshow

South Korea’s KT will set out on June 16 for a roadshow to market a possible issue of notes, a market source said.

BNP Paribas, BofA Merrill Lynch, Citigroup and Nomura Securities are the bookrunners for the Rule 144A and Regulation S deal.

KT is a Seongnam, Korea-based telecommunications provider.

Roadshow for Bocom

China’s Bank of Communications Financial Leasing Co. Ltd. is planning to hold a roadshow in June for a dollar-denominated issue of notes, a market source said.

Standard Chartered Bank is the sole lead manager and bookrunner for the Regulation S deal.

The proceeds will be applied toward the advance of a dollar term loan to Bocom Leasing Development Hong Kong Co. Ltd.

Bank of Communications is based in Beijing.

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