Bulgarian Energy sells notes; EM rallies on Fed statement, then reverses; Ukraine still weak

By Christine Van Dusen

Atlanta, July 27 – Bulgarian Energy Holding EAD sold notes on a Wednesday that saw emerging markets assets rally after the release of the Federal Reserve’s latest statement, then reverse into the close.

The FOMC left rates unchanged, saying that near-term risks had diminished.

“The Fed statement underwhelms,” a New York-based trader said.

Mexico’s five-year credit default swaps spreads closed on Wednesday at 151 basis points from 149 bps. Brazil bucked the trend, with CDS moving to 293 bps from 296 bps.

“Cash prices continue to feel very heavy and underperform both CDS and moves in Treasuries by a wide margin,” he said. “Lat-Am high yield finishes mixed on the day, with Venezuela firmer, whereas Argentina is soft.”

PDVSA saw its 2017s close at 76.25 from 74.50. Venezuela’s 2027s were at 48.25 from 27.50, and Argentina’s Bonar 2024s moved to 116.10 from 116.30. The sovereign’s 2026s closed at 107.125 from 107.75.

“Flows continue to see better buying,” he said. “With the Fed behind us, markets now look to the Bank of Japan and whether they can deliver this Friday.”

This kicks off a spree of central bank activity, a London-based analyst said.

“EM credit has benefitted from the ultralow rate environment,” he said. “The outlook remains clouded ahead of U.S. elections, the Italian referendum on constitutional changes and United Kingdom-European Union divorce settlements.”

In deal-related news, Bulgarian Energy Holding’s new €550 million issue of 4 7/8% notes due Aug. 2, 2021 came to the market on Wednesday at 98.921, according to a company filing and a market source.

JPMorgan was the bookrunner for the Regulation S deal.

Egypt, Ukraine eyed

In other news, Egypt appeared to be closer to securing $12 billion of funding from the International Monetary Fund, the analyst said.

This, plus other loans, will allow the sovereign to raise about $7 billion a year over a three-year period.

“At this stage, potential access to further IMF funding is seen as a positive,” he said.

Looking to Ukraine, weakness continued for the sovereign’s bonds amid concern about the next IMF disbursement, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

CDB does deal

On Tuesday, China Development Bank International Holdings Ltd. – via CDBI Treasure Ltd. – priced a $500 million issue of 2¼% notes due Aug. 2, 2021 at 99.751, a market source said.

Agricultural Bank of China, Bank of China, Bank of Communications, Barclays, China Development Bank, China Construction Bank, Citigroup, ICBC, Morgan Stanley, Natixis and UBS were the bookrunners for the deal.

The lender is based in Beijing.

© 2015 Prospect News.
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