Russian bonds drop after no-go on ceasefire; Qatar, Abu Dhabi well-bid; Petrobras tightens

By Christine Van Dusen

Atlanta, Sept. 3 – Bonds from Russia dipped on Wednesday after Ukraine’s announcement of a ceasefire was retracted and the conflicting nations were unable to agree on a truce.

The Russian sovereign’s 3½% 2019 notes that priced at 99.195 and traded late last week at 98½ bid, 99 offered moved to 97 bid, 98 offered on Wednesday, a London-based trader said.

Russia’s 4 7/8% notes due 2023 that priced at 98.162 and traded Thursday at 98.35 bid, 99.10 offered were seen at 97.44 bid, 98.44 offered on Wednesday.

And the 3 5/8% notes due in 2020 that priced at 99.533 and traded last week at 101¼ bid, 101¾ offered were spotted Wednesday at par bid, 101 offered.

“The market watched the Russian headlines and moves,” a London-based trader said.

Meanwhile, flows for bonds from the Middle East were mixed on Wednesday, with most spreads performing well, he said.

Kuwait-based Burgan Bank’s 2020s received some attention ahead of expected supply.

“It remains heavy due to one account that seems to be panicking to sell his position,” he said. “They close at 113¾ bid, 114½ offered, with paper around. It looks OK versus the [Kuwait Projects Co.] bonds here.”

Notes from Qatar and Abu Dhabi were well-bid, he said, and paper from Majid Al Futtaim Holding was firm.

Looking to Latin America, Argentina – in the wake of its latest default – held an auction and saw its restructured bonds valued at 39.5 cents on the dollar, a trader said.

But other Latin American names fared better on Wednesday, with Brazil-based Petroleo Brasileiro SA (Petrobras) moving 10 basis points tighter and Brazil’s Vale SA tightening by between 5 bps and 7 bps, a New York-based trader said.

Street volumes were heavy for most of the session, he said, with slightly more inquiries on the buyer side as dealers hesitated to part with their already-limited inventory.

EPM sets talk

In deal-related news, Colombia’s Empresas Publicas de Medellin ESP set talk in the high-7% area for a Colombian peso-denominated issue of notes due in 10 years, a market source said.

BofA Merrill Lynch, HSBC and Itau are the bookrunners for the Rule 144A and Regulation S deal.

The issuer is a Medellin, Colombia-based public services company.

Arcelik markets notes

Turkey’s Arcelik AS on Wednesday embarked on a roadshow to market a euro-denominated issue of notes, a market source said.

The roadshow began in London and will travel to Germany, Amsterdam and Paris before concluding on Sept. 8 in Zurich and Geneva.

Other details were not immediately available on Wednesday.

Arcelik is a household appliances manufacturer based in Sutluce, Turkey.

Roadshow for Mexichem

Mexico’s Mexichem SAB de CV will set out on Friday for a roadshow to market a possible issue of notes, a market source said.

BBVA, JPMorgan, Morgan Stanley and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow will begin in London and Los Angeles and conclude on Sept. 8 in New York and Boston.

Mexichem is a chemical company based in Tlalnepantla, Mexico.

Korea Hydro plans roadshow

Korea Hydro & Nuclear Power Co. Ltd. has mandated BofA Merrill Lynch, Deutsche Bank, HSBC, JPMorgan and RBS as bookrunners for a roadshow that will start Sept. 8, a market source said.

The roadshow will end on Sept. 11. An issue of notes is expected to follow.

Korea Hydro is a Seoul, South Korea-based subsidiary of Korea Electric Power Corp.

Brazil to add on

Brazil is planning to add on to its existing issue of 4¼% notes due Jan. 7, 2025, according to a filing from the sovereign.

BTG Pactual, Citigroup and Morgan Stanley are the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general budgetary purposes.

The original issue of $3.25 billion priced on Nov. 1, 2013.

Vietnam seeks issuance

Vietnam is looking to issue $1 billion of notes by the end of 2014, a market source said.

No other details were immediately available on Wednesday.

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