CAR, Korea Development Bank tap market; Bahrain widens; Lat-Am wider; Sagicor on deck

By Christine Van Dusen

Atlanta, Aug. 3 – China’s CAR Inc. and Korea Development Bank sold notes on Monday as Asian equities dropped, Treasuries rallied and the dollar rebounded on the news that monthly manufacturing in China declined as a result of weakened demand.

Also on Monday, oil prices dipped again and the Athens Stock Exchange reopened after five weeks, then dropped 22% “before steadily paring back some losses,” according to a report from Barclays.

“Investors await 'Super Thursday' in the United Kingdom, with the inflation report, monetary policy decision as well as the immediate release of the meeting’s minutes,” the report said.

Meanwhile, tensions grew in Turkey, raising the likelihood of a snap election, the report said.

“Interesting dynamics continue in the market,” a London-based trader said. “Oil is once again slipping, and Bahrain's 2044 is wider by nearly 50 basis points on the month.”

Saudi Electricity Co.'s bonds saw two-way activity, with the 2043s and 2044s cheapening about 28 bps over the month amid some demand, he said.

DPWorld’s 2037s were firmer, after a buy recommendation, while demand was sighted for names like Qatar, Dubai and Abu Dhabi.

“Of course, depth in the market is a little lacking, given it’s early August,” he said. “We’re also lacking supply for the very same reason.”

Sovereign bonds from Latin America were quiet at the start of the week, with spreads and prices trading on Monday morning near Friday’s close, a New York-based trader said.

And the tone for corporate names from the region was negative, another trader said, with wider spreads and cash prices unable to keep up with the rally in Treasuries.

Lat-Am sees weakness

At the end of the day, low-beta spreads for Latin American bonds widened amid ongoing weakness, another trader said.

Five-year credit default swaps spreads for Brazil finished the session at 301 bps from 294 bps while Mexico's moved to 138 bps from 135 bps.

High-yield names from the region were also weaker, with Venezuela and Argentina declining, he said.

Overall, flows were light to start the new month, he said.

Asia in focus

From Asia, many bonds closed their session about 2 bps to 5 bps wider, another trader said.

“Flow was balanced this morning but turned to better selling, post-London open, with real-money accounts taking profit,” he said.

China Minmetals Corp.'s new 3½% five-year notes that priced at 99.501 to yield Treasuries plus 195 bps traded close to unchanged on Monday. And the company’s 4¾% notes due 2025 that priced at 99.858 to yield Treasuries plus 245 bps moved 5 bps to 7 bps wider.

“India remains fairly well supported, with good demand in the financials,” he said. “Ten-year corporates were two-way. Korea was unchanged to a couple wider while we saw some bottom-picking in Malaysia, with spreads unchanged to 2 bps tighter.”

CAR sells notes

In its new deal, China-based rental car company CAR priced $300 million 6% notes due Feb. 11, 2021 at 98.851 to yield 6¼%, a market source said.

Credit Suisse and Standard Chartered Bank were the joint coordinators and – with CMB International – the joint lead managers and joint bookrunners for the Regulation S deal.

The proceeds will be used for capital expenditures and other general corporate purposes, including refinancing debt and enhancing the capital structure.

“We view the deal as credit-neutral, as leverage should still stay at least in line with the average for BB+-rated issuers,” according to a report from Schildershoven Finance BV. Expected OAS is around 500 bps, which is around 80 bps higher than currently trading CARINC’20 and more if looking at similar rated Asian issuers.

Issuance from KDB

Also on Monday, Korea Development Bank priced $1.2 billion three-year notes at par to yield 4.1%, a market source said.

Standard Chartered Bank (Hong Kong) and Standard Chartered Bank (Taiwan) were the bookrunners for the Regulation S deal.

Shanghai Electric launches

China’s Shanghai Electric Power Co. launched a $500 million issue of five-year notes at Treasuries plus 220 bps, a market source said.

The notes were talked at a spread in the 225 bps area.

HSBC and Bank of China are the joint global coordinators and – with Deutsche Bank and Morgan Stanley – the joint lead managers and joint bookrunners for the Regulation S deal.

The issuer is a power generation and equipment manufacturing company.

Sagicor gives guidance

Barbados-based Sagicor Financial Corp. set initial talk in the low-9% area for a $320 million issue of seven-year notes, a market source said.

JPMorgan and Scotiabank are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for refinancing.

The issuer is an insurance and financial services provider that focuses its business on Latin America and other markets.

Peking University sets talk

China’s Peking University Founder Group Co. Ltd. set initial talk in the 100.125 area for a tap of its dollar-denominated notes due in 2018, a market source said.

The original notes – issued by Dawn Victor Ltd. – priced in May at par to yield 5½%.

DBS is the bookrunner for the new Regulation S notes, which will include a change-of-control put at 101%.

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

The issuer is a Beijing-based technology conglomerate.

Oceanwide seeks issuance

China Oceanwide Holdings Group Co. Ltd. is looking to issue dollar-denominated and benchmark-sized notes due in five years, a market source said.

Citic CLSA and UBS are the bookrunners for the Regulation S deal.

The notes will include an investor put at 100%, putable at the end of year three.

The proceeds will be used for overseas general corporate purposes, including project development.

The notes are expected to price this week.

The company is a real estate business based in Beijing.

© 2015 Prospect News.
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