Deal from Wuxi issuer; EM sees support after polls oppose Brexit; Lat-Am strong, then fades

By Christine Van Dusen

Atlanta, June 20 – China’s Wuxi Construction and Development Investment Co. Ltd. advanced a deal on a low-volume but mostly positive Monday for emerging markets assets as polls indicated support for the United Kingdom to remain in the European Union.

A vote is scheduled for Thursday.

“EM credit opens strong,” a trader said. “Cash prices are getting bid up relentlessly on low volume as United States Treasury weakness is being more than offset by spread tightening. Volumes are very low, which begs the question if this move has much depth to it.”

From Latin America, bonds started off strong and then faded a bit into the close, a New York-based trader said.

Brazil’s five-year credit default swaps spreads closed at 331 basis points from 340 bps, while Mexico’s moved to 168 bps from 177 bps, he said.

“Low-beta cash prices close mostly unchanged, as the Treasury sell-off offsets spread tightening,” he said. “Lat-Am high yield finishes firmer on the day, with both Venezuela and Argentina higher.”

Venezuela’s 2027s closed at 44.70 from 44, PDVSA’s 2017s finished at 69 from 68, and Argentina’s Bonar 2024s closed up at 113 from 112.375 while its 2026s finished at 107.25 from 106.15.

“Flows extremely light today, with not a whole lot of conviction either way,” he said. “Seems it may be quiet leading into the referendum, as position-squaring drives day-to-day moves.”

Looking to the Middle East, bonds put in “one of the strongest mornings for quite some time in this space,” a trader said. “Textbook tightening across the board, led, of course, by Qatar.”

Qatar tightens

Qatar’s 2026 notes were tighter by 11 bps, the 2046s by 15 bps and the 2021s by 12 bps, the trader said.

“Very strong,” he said.

That helped encourage other Qatar names to improve, including the new Ooredoo QSC issue of 2026s, which traded 10 bps tighter at 99½ bid, 99 5/8 offered.

Perpetuals see demand

Perpetual bonds from the Middle East saw “good demand,” the trader said, “with the possible exception of the Islamic ones.”

Oman’s 2021s caught a bid, moving 15 bps tighter after printing at 99 last week.

“Bahrain is very solid, with offers few and far between,” he said. “Seen demand again on DP World’s 2023, back to par levels.”

Merger discussed

In other news from the Middle East, investors were talking about the potential merger between the National Bank of Abu Dhabi and First Gulf Bank PJSC.

First Gulf Bank during the weekend released a statement confirming that talks had begun, but the likely outcome was uncertain, he said.

Finansbank gets upgrade

In news from Turkey, Turkiye Finans Katilim Bankasi AS (Finansbank) was upgraded by Moody’s Investors Service to Ba1, a trader said, following Qatar National Bank’s acquisition of a 99.81% stake in Finansbank.

“The one-notch upgrade is substantially below our expectations, as we had expected an upgrade above the investment-grade threshold, rather to Baa2,” he said. “That said, we consider Finansbank bonds as attractive as a means of indirect exposure to QNB.”

Finansbank’s 2017s are currently trading about 130 bps over QNB’s 2017s, he said.

Wuxi Construction sets talk

China’s Wuxi Construction set initial talk at Treasuries plus 260 bps for a $300 million issue of notes due in three years a market source said.

Standard Chartered Bank, JPMorgan and Wing Lung Bank are the joint global coordinators and – along with China Minsheng Banking, Shanghai Pudong Development Bank, HSBC and Bocom International – the joint bookrunners and joint lead managers for the Regulation S deal.

Wuxi Construction is a Wuxi-based developer, operator, manager and builder of property.

Roadshow for Papua New Guinea

Papua New Guinea has set a roadshow for a possible issue of notes, a market source said.

ANZ, Bank of China and JPMorgan are the bookrunners for the deal.

The roadshow will begin June 21 in London and travel to Boston before concluding on June 23 in New York.

NTPC mandates bookrunners

India’s NTPC Ltd. has mandated Citigroup, Deutsche Bank, HSBC and SBI Capital as bookrunners for an issue of green bonds, a market source said.

Other details were not immediately available on Monday.

NTPC is a New Delhi-based power company.

Roadshow for Fullerton

Singapore’s Fullerton Healthcare Corp. has mandated CIMB Bank Bhd. and Oversea-Chinese Banking as bookrunners for a Singapore dollar-denominated issue of notes, a market source said.

The notes will be marketed on a roadshow that begins Wednesday in Singapore and ends Thursday in Hong Kong.

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