Investors wary of headlines from Russia, Ukraine; Sino-Ocean plans marketing trip for Monday

By Christine Van Dusen

Atlanta, July 18 – Bonds from Russia continued to suffer in trading on Friday amid sanctions against some of its banks and concerns about who downed a Malaysian Airlines flight over Ukraine.

“There is a high likelihood of an unprecedented increase in sanctions, or at least the threat of, that would have the potential to cripple Russian bond markets,” a London-based analyst said. “For now, there is a high likelihood of a ceasefire while the crash is investigated.”

The latter news led to a small rally in some emerging markets bonds on Friday morning, she said.

“Most investors are awaiting further developments,” she said. “New issues have taken a back seat this week, given the events.”

Still, some of the new bonds did get attention in the secondary market. Turkey-based Alternatifbank AS’ new 3 1/8% five-year notes that priced at 99.477 traded relatively flat on Friday.

The notes came to the market during the week at a yield of 3.239%, or mid-swaps plus 143 basis points, via BofA Merrill Lynch and Commerzbank in a Regulation S deal.

South Africa’s new two-tranche issue of €500 million 3¾% notes due 2026 and $1 billion 5 3/8% notes due 2026 performed “relatively well,” a trader said.

The $1 billion 5 3/8% notes due 2044 that priced at 98.303 to yield 5.491% tightened about 3 bps. Barclays, Citigroup and Rand Merchant Bank were the lead managers.

Taking a closer look at Russia, bonds from banks were about 72 bps wider after sanctions were announced for such companies as Gazprombank and Vnesheconombank, the analyst said.

“We don’t think the companies will face major pressure as a result,” she said. “But the potential for a further escalation is the clear focus now.”

Corporates also suffered, with bonds widening an average of 47 bps.

Turkey, Middle East in focus

Bonds from Turkey were not very active at the end of the week, with banks tightening about 4 bps, the analyst said.

“Turkish corporates saw few moves of note,” she said.

And activity for notes from the Middle East was very limited, a trader said, though Kuwait Projects Co.’s 2020s did widen by 10 bps.

Abu Dhabi Commercial Bank and Abu Dhabi National Energy Co. (TAQA) saw decent bids, the analyst said.

Sino-Ocean sets roadshow

China’s Sino-Ocean Land Holdings Ltd., through Sino-Ocean Land Treasure Finance I Ltd., will set out on Monday for a roadshow to market a dollar-denominated issue of notes, a market source said.

Bank of China (Hong Kong), Deutsche Bank, Goldman Sachs, HSBC and JPMorgan are the joint global coordinators. ANZ, DBS, Morgan Stanley and UBS are the bookrunners for the Regulation S issue.

The proceeds will be used to repay existing debt and for general corporate purposes, according to a company filing.

The issuer is a Beijing-based real estate developer.

Rolta India sells notes

On Thursday, Rolta India Ltd. priced $300 million 8 7/8% notes due 2019 at 99.505, a market source said.

Barclays and Citigroup were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repay debt and for working capital and general corporate purposes, according to a company announcement.

The deal was oversubscribed by more than eight times, with an order book of more than $2.4 billion from more than 200 accounts, the company said.

Asset managers picked up 79%, banks 12% and others 19%, with 47% from Asia, 35% from the United States and 18% from Europe.

Rolta India is a technology services company based in Mumbai.

Entel prints bonds

Also on Thursday, Chile’s Empresa Nacional de Telecommunicaciones SA (Entel) priced an $800 million issue of 4¾% notes due 2026 at 99.763 to yield Treasuries plus 230 bps, a market source said.

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

The proceeds will be used to refinance certain existing debt and for general corporate purposes.

The issuer is a Santiago-based telecommunications company.

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