CAF sells notes; Gulf region rebounds; Turkey spreads narrow; Petrobras, Vale get tighter

By Christine Van Dusen

Atlanta, Nov. 3 – Venezuela’s Corporacion Andina de Fomento (CAF) sold notes on Tuesday as emerging markets put in a “solid session,” with risk sentiment improving and names from Kazakhstan tightening by as much as 21 basis points.

“[The Gulf Region] rebounded from a weak tone yesterday,” a trader said. “The Saudi Electricity Co. curve was 10 bps to 15 bps tighter.”

Bahrain’s bonds moved in by as much as 20 bps, he said.

“The three tranches from Lebanon are trading but under the radar and with limited volumes,” he said.

The sovereign printed $1.6 billion notes, with $500 million 6¼% notes due 2024, $500 million 6.65% notes due 2028 and $600 million 7.05% notes. All three tranches priced at par.

Citigroup, Fransabank, Societe Generale de Banque au Liban and Standard Chartered Bank were the bookrunners for the Regulation S deal.

“Seeing demand for Nigerian banks and Gulf perpetuals,” the trader said. “Quieter than yesterday, but still active enough.”

Investors were also chasing National Bank of Abu Dhabi, which saw its 2017 notes tighten by about 10 bps to 102¼ bid, 102½ offered.

“Egypt is lagging a little,” another trader said. “South Africa is very solid again.”

“The market is opening up firmer, with a decent risk tone as developed-market rates – off the highs – helped EM sentiment,” another trader said. “The rest of the week I think will be spent repositioning into [economic data] and index followers adjusting from the big rally in Turkey.”

In other news, the National Bank of Greece agreed to sell all of its stake in Turkey’s Finansbank AS, which lifted the latter company’s 2017s to 102¾ on Tuesday, a trader said.

Turkey tightens

Turkey’s sovereign bonds moved as much as 30 bps tighter in the belly of the curve, then backed off about 10 bps as real-money sold into the rally and Street shorts got filled after Sunday’s election, another trader said.

Investors will now be looking for cues on new government appointments, budget plans and policy.

“From here my view is Turkey will trade defensive and range-bound, as we now have some clarity and direction on the political front,” he said.

Banks from Turkey continued to get a lift, particularly on the short end, and remained cheap to the complex, he said.

“Flows are showing better buying,” he said, “but good selling of corporates that had outperformed and have limited spread compression from here.”

Lat-Am gets a lift

Looking to Latin America, the market was moving higher on Tuesday, a New York-based trader said.

Brazil-based Petroleo Brasileiro SA moved a point higher, while Vale SA moved 10 bps tighter after tightening that much on Friday and Monday, he said.

“Petrobras flows are still one way,” he said.

Meanwhile, Mexico-based Cemex SAB de CV got a lift in the Street, he said, climbing ½ point, he said.

Braskem, Gerdau improve

Brazil-based Braskem SA and Gerdau SA also got a boost in Tuesday trading, a trader said.

“Braskem has had a very strong run over the last couple of weeks, particularly in the belly,” he said.

Brazil-based Odebrecht SA saw investor interest, with its 2021s well-bid, another trader said.

“The 2022s are lagging, but still moving higher,” he said.

Brazil outperforms

At the end of the day, spreads for Latin American external debt moved tighter, with Brazil outperforming, a trader said.

Brazil’s credit default swaps spreads moved to 388 bps from 420 bps, while Mexico’s moved to 135 bps from 144.50 bps.

“Cash prices continue to be well bid and grind higher in the face of weak U.S Treasuries as a back up in rates is no match to the spread tightening we are currently witnessing,” he said.

High-yielders rally

High-yield names from Latin America joined the rally, with strength in oil gave a leg up to Venezuela and PDVSA.

Venezuela’d 2027s moved higher to 47 from 44.40 while PDVSA’s 2017s moved to 62¼ from 60.40.

“Heavy volumes throughout the day, with better buyers of all Lat-Am paper dominating the flows,” he said.

CAF prints notes

In its new deal, Venezuela’s CAF priced €750 million 1% notes due Nov. 10, 2020 at 99.903 to yield 1.02%, or mid-swaps plus 73 bps, a market source said.

The notes were talked at mid-swaps plus 73 bps to 75 bps after initial guidance of 80 bps to 85 bps.

The notes were initially talked at mid-swaps plus 80 bps to 85 bps.

BofA Merrill Lynch, Credit Agricole CIB, Credit Suisse and HSBC were the bookrunners for the Regulation S transaction.

CAF is a lender based in Caracas, Venezuela.

Jordan gives guidance

Jordan set initial talk in the 6¾% area for a $500 million issue of notes due in January of 2026, a market source said.

Citigroup and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

Cameroon sets roadshow

Cameroon is setting out this week for a roadshow to market a $1.5 billion issue of notes, a market source said.

Societe Generale CIB and Standard Chartered Bank are the bookrunners for the Rule 144A and Regulation S deal.

Kexim deal draws orders

Korea Export-Import Bank’s (Kexim) new $1.75 billion issue of notes due in 2021 and 2025 drew a final order book of more than $7.5 billion, a market source said.

The $750 million 2½% notes due May 10, 2021 priced at 99.969 to yield Treasuries plus 95 bps. The notes were talked at a spread in the 110-bps area.

That tranche took in more than $2 billion orders from 177 accounts, with 53% from Asia, 14% from the United States and 33% from Europe, the Middle East and Africa.

On Tuesday morning, the notes traded between Treasuries plus 94 bps to 92 bps.

Notes see secondary action

Kexim’s second tranche – $1 billion 3¼% notes due Nov. 1, 2025 – priced at 99.746 to yield Treasuries plus 110 bps, following talk in the 130-bps area. Those notes drew more than $5.5 billion in orders from 300 accounts, with 53% from Asia, 33% from the United States and 14% from Europe, the Middle East and Africa.

On Tuesday the notes traded between Treasuries plus 99 bps and 97 bps.

ANZ Securities, Barclays Capital, BNP Paribas, BofA Merrill Lynch, Citigroup and Societe Generale CIB were the joint bookrunners and lead managers for the Securities and Exchange Commission-registered deal. Samsung Securities is a joint lead manager.

The proceeds will be used for general operations, including extending foreign currency loans and repayment of maturing debt.

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