Expectations of China's economic slowdown hits Asian bids; KWG trades below issue price

By Aleesia Forni

Columbus, Ohio, March 22 - Apprehensions about an economic slowdown in China took a toll on emerging markets debt during the Thursday session, sources said.

Selling was triggered by HSBC's news that China's "flash" manufacturing Purchasing Managers' Index for March fell to 48.1 from February's four-month high of 49.6.

China's KWG Property Holding Ltd.'s 13¼% senior notes are now more than 3 points below last week's issue price. KWG priced $400 million of the notes at 99.122% of par on March 15.

The notes saw some real-money selling on Thursday, while selling was "more or less" confined to dealer- and fast-money selling last week.

Also in the Chinese corporate space, Agile Property Holdings Ltd.'s 9 7/8% senior notes due 2017 traded at 96.25 bid, 96.50 offered on Thursday.

The China-based developer priced $700 million of the notes at par on March 13.

Asian high-grades wider

Asian high-grade corporates were 5 basis points to 7 bps wider in Thailand, Malaysia and Singapore, while Hong Kong names widened by 10 bps to 15 bps, according to a market source.

Korean banks and corporates saw the most action on Thursday, with high-grade corporates widening between 8 bps to 10 bps for the day.

Schahin up $0.35, $0.65

Brazil's Schahin II Finance Co. (SPV) Ltd. priced an upsized $750 million issue of 5 7/8% 10-year amortizing senior secured notes (Baa3/BBB-/BBB-) at par on Wednesday, according to market sources. The yield printed at the tight end of price talk, which was set in the 6% area, due to strong demand for the bonds.

The deal was up $0.35 bid, $0.65 offered in the gray market at Thursday's close, according to a market source.

Russian Railways announces price talk

Russian Railways (Rurail) (Baa1/BBB/BBB) has released initial pricing guidance for its expected seven-year dollar- or ruble-denominated deal in the 8% area, according to a market source.

Russian Railways is a Moscow-based railroad operator.

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