Huawei, DP World, Agile print notes; EM has mixed reaction to Treasury moves

By Christine Van Dusen

Atlanta, May 12 – China’s Huawei Technologies Co. Ltd., Dubai’s DP World and China’s Agile Property Holdings Ltd. sold notes as emerging markets debt saw poor liquidity and fairly balanced flows on a Tuesday made turbulent by continued instability in Treasury rates.

“Another day of rate volatility, and this market gyrating against those moves,” a London-based trader said.

There seems to be little consensus on where Treasury rates are heading, another trader said.

“But everyone seems in agreement that if and when EM spreads widen, they want to add,” he said. “So far the level of selling has been muted. Cash positions are OK, so no need to sell. Absolute-return investors are actually buying opportunistically at cheaper levels, and the thought of crossing bid-offer isn’t really appealing for fast-money punters.”

Bonds from the Middle East and Asia seemed to view the Treasury moves as positive, and tightened early on Tuesday, another trader said.

“Bond prices outperform the move,” he said. “With the sell-off in rates looking to be more a technical move and a search for yield still driving investors, I expect we will outperform for now.”

High-grade bonds from Asia closed their session between 1 basis point and 4 bps tighter, the London trader said.

“Thirty-year paper outperformed as real-money buyers took advantage of the higher yields and illiquid names,” he said.

Indeed, the 2045s from China-based Cnooc Ltd., China Petroleum & Chemical Corp. (Sinopec) and Malaysia’s Petroliam Nasional Bhd. (Petronas) all closed the early session 5 bps tighter, he said.

“Korea closed unchanged,” he said.

But Latin American bonds suffered on Tuesday, with names like Brazil-based Petroleo Brasileiro SA and Vale SA losing resilience and moving another 5 bps wider, even as Treasuries ended the day flat, a New York-based trader said.

Bid fades

Buyers emerged but the overall Street bid for high-grade names faded, the New York trader said.

Industrial company bonds from Brazil also took a hit after reaching highs in April.

“[Cemex SAB de CV] looks lower again today,” a trader said. “Chile high grade continues to trade with decent Street liquidity.”

Pacific Rubiales in focus

Toronto-based and Colombia-focused Pacific Rubiales Energy Corp. was once again in the news, this time after a Spanish billionaire joined a group of Venezuelan investors that oppose the size of the takeover bid from Mexico-based Alfa SAB and Harbour Energy Ltd.

Pacific Rubiales’ curve moved lower in response, with reduced customer inquiry and Street volume as investors questioned how smoothly the takeover was likely to go and what lay ahead for the company, the New York trader said.

Light trading for KDB

The new issue of notes from Korea Development Bank – $500 million 2¼% notes due 2020 that priced Monday at 99.836 to yield 2.285%, or Treasuries plus 72.5 bps – moved to 99.80 bid, 99.90 offered on Tuesday amid little trading, he said.

About 34% of the more than $1.3 billion in orders came from Asia. About 27% of the orders came from Europe and 39% from the United States, with 40% from insurance and pension funds, 27% from central banks and government entities, 23% from asset managers and 10% from banks and private banks.

Barclays, Citigroup, Credit Suisse, Goldman Sachs, HSBC, KDB Asia and Societe Generale were the bookrunners for the Securities and Exchange Commission-registered deal.

“Malaysia was very strong,” he said, noting that the sovereign’s 2025 notes were tighter by 10 bps.

Issuance from Huawei

In its new deal, China’s Huawei Technologies – through Proven Honour Capital Ltd. – priced $1 billion 4 1/8% notes due May 19, 2025 at 99.060 to yield 4.248%, or Treasuries plus 195 bps, a market source said.

ANZ, Bank of China (Hong Kong), DBS Bank, ING and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The issuer is a networking and communications equipment company based in Shenzhen, Guangdong.

DP World sells bonds

Dubai’s DP World priced a $500 million issue of 3¼% notes due May 18, 2020 at 99.835 to yield mid-swaps plus 155 bps, a market source said.

The notes were initially talked at a spread in the 180 bps area.

Barclays, Citigroup, Deutsche Bank, Emirates NBD Capital, HSBC, National Bank of Abu Dhabi and Societe Generale CIB were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

“Disappointing that it’s just a five-year, but it’s a decent book size, so someone wants it,” a trader said.

Said another trader: “Infrequent issuer and highly regarded name.”

Agile does deal

China’s Agile Property priced $500 million 9% notes due May 21, 2020 at 99.507 to yield 9 1/8%, a market source said.

HSBC, Standard Chartered Bank, BNP Paribas and ICBC International were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance existing indebtedness.

Agile Property is a Hong Kong-based property development company.

Chinese corporate sets talk

China General Nuclear Power Corp. set talk in the Treasuries plus 180 bps area for a dollar-denominated issue of 10-year notes, a market source said.

HSBC, ICBC, Bank of China, JPMorgan, ABC International and Societe Generale CIB are the bookrunners for the Regulation S deal.

The nuclear power plant company is based in Shenzhen, China.

© 2015 Prospect News.
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