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Rustavi Azot on deck; roadshows for Chinese names; Ukraine rises; Asian bonds, Lat-Am widen
By Christine Van Dusen
Atlanta, July 27 – Georgia’s Rustavi Azot LLC prepped a new deal on a mostly risk-off Monday, even after Ukraine made an interest payment on its bonds, progressed in talks with investors and received more support from the International Monetary Fund.
Ukraine’s bond prices rose on the news, following Friday’s “strong trading session,” said Fyodor Bagnenko, a fixed-income trader with Dragon Capital. “This was interpreted rather positively, and cautious demand across the curve pushed prices ½ point higher.”
Also impacting emerging markets assets were commodity prices continuing to weaken and investors searching for safe havens.
“The recent declines in commodity prices are likely to have important implications for EM assets,” according to a report from Barclays Capital. “While commodity-related EM credits and currencies have underperformed, the potential pass-through of lower commodity prices into inflation and their effects on fiscal outcomes imply a more dovish monetary policy in many EMs.”
Against this backdrop, Asian bonds opened lower with “orderly selling, which soon turned into a panic for the exits,” a London-based trader said.
“Investment-grade cash closed the day 3 basis points to 8 bps wider, with 10-year energy-related names underperforming,” he said. “Recent issues held in better than expected, with real-money buyers on dips. Roughly 5 bps wider on the day.”
China Minmetals Corp.’s new 3½% five-year notes that priced at 99.501 to yield 3.61%, or Treasuries plus 195 bps, traded at 201 bps on Monday. The company’s other tranche – 4¾% notes due 2025 that priced at 99.858 to yield 4.768%, or Treasuries plus 245 bps – moved to 254 bps.
Deutsche Bank, HSBC, JPMorgan, ICBC and Citigroup were the bookrunners for the Regulation S deal.
Rustavi Azot to print notes
In deal-related news, Georgia-based nitrogen fertilizer manufacturer Rustavi Azot readied a $180 million issue of notes due in 2020, which were talked last week at 11% to 13%.
Citigroup and Galt & Taggart were the bookrunners for the Regulation S deal.
Market sources were also whispering about a possible upcoming issue of dollar-denominated notes from Kenya Pipeline Co.
Lat-Am in focus
Looking to Latin America, low-beta spreads widened on the day – amid heavier volumes and better sellers – but managed to close away from the widest levels of the session, a New York-based trader said.
Brazil’s five-year credit default swaps spread was unchanged at 300 bps, while Mexico’s moved to 143.50 from 141, he said.
Cash prices weakened, he said, but a rally in U.S. Treasuries helped to keep levels close to Friday’s.
Still, bonds from Venezuela and Argentina moved lower, he said, with PDVSA’s 2017s closing at 63 from 64¾ and Venezuela moving a point to trade at 40¼.
Oil companies underperform
Oil companies from China were underperformers on Monday, another trader said, with the Cnooc Ltd. curve moving 5 bps to 8 bps wider.
“Korea was 2 bps to 5 bps wider,” he said.
Ten-year corporate bonds from India were 5 bps wider and demand in short-end financials remained strong, he said.
Asian trading ‘sloppy’
Overall, trading of Asian bonds was “pretty sloppy” on Monday, another trader said.
“China credit led the widening as we continue to see paper coming out of real money,” he said. “Widened another 3 bps to 4 bps since Asia closed.”
Bonds from oil-, metal- and cement-related corporates continued to see pressure, he said.
“Sovereigns continue to fall, with Treasuries rallying hard and outright cash players exiting, waiting for re-entry,” he said. “Asia high-yield is also seeing large-cap property sellers.”
Roadshow ahead for eHi
China’s eHi Car Services Ltd. will set out on Tuesday for a roadshow to market dollar-denominated notes, a market source said.
Deutsche Bank and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.
The proceeds will be used for capital expenditures and other general corporate purposes, including refinancing of outstanding indebtedness and enhancing capital structure, according to a company announcement.
eHi is a car services and car rentals provider based in Shanghai.
Tingyi sets roadshow
Tingyi (Cayman Islands) Holding Corp. said it plans to conduct an international offering of senior notes.
The company began a series of investor meetings on Friday.
Deutsche Bank AG, Singapore Branch and Nomura International plc are the joint bookrunners and joint lead managers for the proposed Regulation S offering.
Proceeds will be used to refinance existing debt and for general corporate purposes.
Tingyi is a food and beverage producer and distributor based in Tianjin, China.
Sritex to issue notes
Indonesia’s PT Sri Rejeki Isman Tbk. (Sritex) is looking to price $420 million of bonds during the fourth quarter of the year, a market source said.
The proceeds will be used to fund acquisitions in Asia and Europe.
Sritex is an Indonesian manufacturer of textiles.
Marisa Wong contributed to this article.
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