FOMC minutes help EM spreads recover; Asian issues see activity; Sharjah mandates bookrunners

By Christine Van Dusen

Atlanta, Aug. 17 – Latin American spreads on Wednesday closed mostly unchanged on Wednesday as emerging markets investors focused on the Federal Open Market Committee, which released minutes that indicated it may be necessary to raise interest rates soon.

“With little news flow amid a summer lull, the focus has shifted towards global sentiment, driven by U.S. data, Fed-speak and oil prices,” a London-based analyst said.

Latin American bonds widened earlier in the session but tightened back after the FOMC announcement, with Brazil’s five-year credit defaults swaps spreads finished the day unchanged at 254 basis points.

Mexico’s widened slightly, moving to 134 bps from 133 bps, a New York-based trader said.

“Cash prices continue to be well-bid,” he said. “Saw a nice bounce in long-end bonds post-2 p.m.”

High-yield names from the region were mixed, with Argentina softening slightly and Venezuela mostly unchanged.

Argentina’s Bonar 2024s closed at 118.75 from 119, and its 2026s finished at 112.75 from 113.25, while Venezuela’s 2027s ended at 47.75 from 47.50. PDVSA’s 2017s closed unchanged at 74, he said.

“Flows on the lighter side today, with better buy-side from the inquiries we saw,” he said. “With low rates globally, stronger EMFX and commodities, Lat-Am credit continues to be in a sweet spot as investors look for extra yield in the space.”

In deal-related news, the Emirate of Sharjah mandated banks for a dollar-denominated issue of Islamic bonds, a market source said.

HSBC, Citigroup, Standard Chartered, Emirates NBD, First Gulf Bank, Dubai Islamic Bank, Kuwait Finance House and Bank ABC are the bookrunners for the deal.

Russia postpones Bashneft sale

Looking to Russia, tensions with Ukraine remained, though no escalation of their conflict was reported. Russia did make some news, however, after the government decided to postpone the sale of its stake in JSC Bashneft.

“Now [Russia] has to find $5 billion to cover the budget deficit,” according to a report from Schildershoven Finance BV. “Reasons for the delay included a weak market and the state’s plan to sell other assets this year.”

A eurobonds sale might not be very successful, the report said.

“We expect the government to pay more attention [to] ruble dynamics as the currency appreciation may add problems to the budget execution,” the report said.

In trading from Ukraine, bonds so far this week have moved slightly lower, with “cautious bids,” said Svitlana Rusakova of Dragon Capital.

Quasi-sovereigns have been quiet, she said.

Eskom widens, Turkey softens

South Africa-based Eskom Holdings saw its bonds on Wednesday move as much as 35 bps wider on the day, a trader said.

And notes from Turkey opened softer, with rates failing to retrace the previous night’s moves, another trader said.

“It feels like the Street is a seller of risk in general, and dropping offers to get lifted,” he said.

The 2026s traded lower and the sukuk were bid, he said.

“Overall it looks like we are having a pause in the risk rally ahead of tonight’s Fed minutes, which will probably be a touch on hawkish side given global risks have been contained and job creation seems to be OK,” he said.

Turkish names see flows

Banks and corporates from Turkey were slightly better-offered, with some two-way flows and real-money adding on the front end, the trader said.

“Middle East accounts are adding front end and the [Akbank TAS] curve,” he said.

At the close, the market was a little bit softer, he said, with sovereigns, banks and corporates finishing the session about 3 bps to 4 bps wider.

China Aircraft rises

In other trading on Wednesday, the new issue of notes from Hong Kong-based China Aircraft Leasing Group Holdings Ltd. – $300 million 4.9% notes due 2021 that priced Monday at par – was spotted at 100.705 bid, 100.392 ask, a market source said.

China Everbright Bank and DBS Bank were the bookrunners and joint lead managers for the Regulation S deal.

The proceeds will be used for the aircraft leasing company’s new aircraft acquisitions, for financing its aircraft disassembly center, for business expansion and for general corporate purposes.

HNA trades up

China’s HNA Group Co. Ltd. saw its new issue of $300 million 6% notes due Aug. 18, 2019 that priced Monday at par to yield 6% trade at 101.922 bid, 101.551 offered on Wednesday, a market source said.

The issuer is a Haikou City, China-based business conglomerate that focuses on airport services, air transportation, real estate, hotel and catering, travel services, commercial retail, logistics and transportation, financial services and network information technology businesses.

NTPC moves higher

India-based NTPC Ltd.’s recent Rs. 20 billion 7 3/8% green bonds due Aug. 10, 2021 that priced at 99.575 to yield 7.48% were seen at 100¼ bid, 100½ offered, a market source said.

Axis Bank, HSBC, MUFG and Standard Chartered Bank were the bookrunners for the New Delhi power company’s Regulation S deal.

The proceeds will be used to finance investments in renewable energy projects.

© 2015 Prospect News.
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