Primary hosts Poland, ICBC, Evergrande; roadshows ahead; Brazil stabilizes; Kazakhstan eyed

By Christine Van Dusen

Atlanta, Jan. 11 – Poland, Industrial and Commercial Bank of China Ltd. and China’s Evergrande Real Estate Group Ltd. sold new bonds on Monday as investors in emerging markets assets remained cautious amid increasing volatility related to China and the prices of oil and copper.

“Timid, slow start here,” a trader said. “Super-light Street volumes, customer inquiry light but normal.”

Among sovereign names, those from Sub-Saharan Africa have been hit the hardest so far, a strategist said.

High-grade names from Brazil – like Gerdau SA and Braskem SA – gained some stability on Monday, a New York-based trader said.

And even as copper prices struggled, Chile’s Corporacion Nacional del Cobre de Chile (Codelco) found more Street support and saw its spreads stabilize, he said.

“Institutional flows remain mixed, with better buyers of the 2025s and sellers of the longer issues,” he said. “Other Chile high-grade remains stable.”

The market appeared to be pricing in credit risk and liquidity premiums, as well as “dollar strength and depressed oil prices for the foreseeable future,” a London-based trader said. “The market is lower across the board.”

Investors were also keeping an eye on Kazakhstan, as the sovereign’s $64 billion sovereign wealth fund looks like it could be drained within the next 10 years if oil prices remain low, the strategist said.

“The depletion will likely also exert pressure on global asset managers, following withdrawals from other sovereign funds and especially Saudi Arabia already last year,” he said.

Meanwhile, Moody's Investors Service said that the sovereign's plan for about $5.2 billion in total issuance this year is a credit negative.

Lat-Am in focus

Taking a closer look at Latin America, most names finished the day wider and lower but saw some recovery from earlier losses, a New York-based trader said.

Brazil’s five-year credit default swaps spreads tightened to finish at 490 bps from 494 bps while Mexico’s widened to finish at 190 bps from 186 bps.

“Cash prices drop as spread widening and U.S. Treasury weakness have the market adjusting levels,” he said. “We did see a good late-day snap-back in cash bonds, which seemed to coincide with equities paring losses.”

Venezuela continued to be hurt by oil weakness, he said, with the sovereign's 2027s closing at 38 from last week's 39.29 and PDVSA's 2017s ending the session at 48.75 from 50.

“Flows quiet for the session, with a lack of conviction,” he said.

Poland sells notes

In its new deal, Poland priced a two-tranche issue of €1.75 billion notes due Jan. 19, 2026 and Jan. 18, 2036, a syndicate source said.

The €1 billion 1˝% 10-year notes priced at mid-swaps plus 65 bps, following talk in the 65 bps area.

The €750 million 20-year notes priced at mid-swaps plus 100 bps, after talk of 100 bps to 105 bps.

Citigroup, HSBC, ING, Societe Generale and Unicredit were the bookrunners for the Regulation S deal.

Other details were not immediately available on Monday.

ICBC prints deal

In another Monday deal, Industrial and Commercial Bank of China priced $500 million three-year floating-rate notes at par to yield Libor plus 115 bps, a market source said.

ICBC Asia, ICBC Singapore, BNP Paribas, ICBC International, ICBC Standard Bank, Citigroup and ING were the bookrunners for the Regulation S deal.

The proceeds will be used for general corporate purposes.

Issuance from Evergrande

China’s Evergrande sold $300 million three-year notes at par to yield 8%, matching talk, a market source said.

Credit Suisse, China Merchants Securities and Haitong International were the bookrunners for the Regulation S deal.

The proceeds will be used for refinancing existing debt and for general working capital purposes.

The real estate developer is based in Guangzhou, China.

Talk from Ascendas

Singapore’s Ascendas Real Estate Investment Trust set talk in the 3.65% area for a Singapore dollar-denominated issue of notes due in seven years, a market source said.

DBS, Mizuho Securities, OCBC Bank and UOB are the bookrunners for the Regulation S deal.

Ascendas is a business space and light industrial real estate investment trust with a diversified portfolio of 17 properties in Singapore.

Hong Kong Airlines guidance

Hong Kong Airlines set initial talk in the mid-7% area for an offering of three-year dollar-denominated notes, a market source said.

Guotai Junan International, JPMorgan, BOC International and Hong Kong International Securities are the bookrunners for the Regulation S deal, which is expected to price this week.

Proceeds will be used for general corporate purposes.

The notes will be issued via Blue Sky Fliers Co. Ltd.

Hsin Chong on roadshow

China's Hsin Chong Construction Group Ltd. is on a roadshow for a dollar-denominated offering of notes, a market source said.

Credit Suisse, UBS, China Merchants Securities and Nomura Securities are the bookrunners for the Regulation S deal.

The roadshow began on Friday.

The construction and property company is based in Hong Kong.

Roadshow for Oman Telecom

Oman Telecommunications Co. SAOG began a roadshow on Monday for a possible issue of Islamic bonds, a market source said.

Standard Chartered Bank is the sole structuring adviser, and HSBC, National Bank of Oman and Standard Chartered Bank are the joint placement agents for the Regulation S deal.

Courts Asia sets roadshow

Singapore’s Courts Asia Ltd. will depart on Tuesday for a roadshow to market a Singapore dollar-denominated issue of notes, a market source said.

DBS Bank and HSBC are the bookrunners for the deal.

The Singapore-based company is a retailer of household furniture and electronics.

Israel to market notes

Israel on Tuesday will set out on a roadshow to market two tranches of dollar-denominated notes, a market source said.

Barclays, Citigroup and Goldman Sachs are the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for the general purposes of the state.

And Serbia plans to issue up to $1 billion of notes this year, another market source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.