Slovenia, Suriname sell notes; Saudi Arabia sees action; Equate on deck; Sekerbank scraps deal

By Christine Van Dusen

Atlanta, Oct. 26 – Slovenia and Suriname sold notes on a Wednesday that saw spreads from Middle Eastern bonds tighten while cash prices faced pressure as oil prices receding from recent highs.

“Another pretty busy day, with the rates move taking its toll on long-dated asset prices,” a London-based trader said.

In trading, Saudi Arabia’s new $17.5-billion megadeal continued to get attention. The new $5.5 billion 2 3/8% notes due in 2021 that priced at 99.007 to yield 2.588%, or Treasuries plus 135 basis points, traded Wednesday at 99.80 bid, 99.84. On Tuesday the notes were seen at 99¾ bid, 99.85 offered.

“Felt like there was a significant buyer of the 2021s in the market, as this held very well,” the trader said.

The $5.5 billion 3¼% notes due in 2026 that priced at 98.679 to yield 3.407%, or Treasuries plus 165 bps, on Wednesday traded at 99.48 bid, 99.53 offered. On Tuesday they traded at 99.53 bid, 99.63 offered.

“The 2026s remain very well offered, with balanced Asian flow, before fading as the day went on,” he said.

And the $6.5 billion 4½% notes due in 2046 that priced at 98.015 to yield 4.623%, or Treasuries plus 210 bps, traded at 99.65 bid, 99¾ offered on Wednesday. On Tuesday the notes were spotted at 99.63 bid, 99.88 offered.

“Good two-way,” he said. “Still outperforming the 2026 on the curve.”

The new issue from Jordan, $1 billion 5¾% notes due 2027 that priced at 99.628 to yield Treasuries plus 403.2 bps, moved back below par in trading on Wednesday after climbing as high as 100.87 on Tuesday.

“Too many loose bonds around at the moment,” the trader said.

Kuveyt Turk trades

The new issue of notes from Turkey’s Kuveyt Turk Katilim Bankasi AS saw some activity in trading on Wednesday, a trader said.

The Istanbul-based Islamic finance institution on Tuesday priced $500 million 5.136% notes due 2021 at par to yield mid-swaps plus 385 bps in a Regulation S deal.

The notes were initially talked at a spread in the low-mid swaps plus 400 bps area.

On Wednesday the notes – which were four times oversubscribed – were spotted at 100¾ bid, 100.95 offered.

In other trading from Turkey, cash prices were softer alongside rates, but spreads tightened, a trader said.

“Flow is two-way,” he said.

Mozambique in ‘debt distress’

Investors were also keeping an eye on Mozambique, which on Tuesday announced that it was in debt distress and “will be looking to engage with creditors in order to restructure its debt once more,” the analyst said. “The Sub-Saharan African nation’s fiscal position remains in a state of peril after it exchanged its Ematum bonds, also referred to as tuna bonds, into new notes and after the IMF discovered $1.4 billion in undisclosed loans.”

The Ematum bonds he was referring to were the notes that Mozambique issued – $726,524,000 of 10½% notes due 2023 at par – in April in exchange for bonds issued by state-owned fishing company Empresa Mocambicana de Atum SA (Ematum).

In response to this latest news, the sovereign’s 10½% 2023s dipped on Wednesday, he said.

Slovenia sells notes

In its new deal, Slovenia priced a €1 billion issue of notes due in November of 2040 at 97.829 to yield mid-swaps plus 90 bps, according to a filing from the sovereign.

Barclays Bank, Deutsche Bank, Goldman Sachs and JPMorgan were the bookrunners for the Regulation S deal.

Other details were not immediately available on Wednesday.

Suriname prices bonds

Also on Wednesday, Suriname priced $550 million 9¼% notes due Oct. 26, 2026 at par to yield 9¼%, according to a filing from the sovereign.

Oppenheimer and Scotiabank were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repay debt and for general budgetary purposes.

Equate sets talk

Kuwait’s Equate Petrochemical Co. KSCC revised talk for a two-tranche issue of benchmark-sized and dollar-denominated notes due in five and 10 years, a market source said.

The long five-year notes, due in March of 2022, were talked in the mid-swaps plus 212.5 bps area after initial talk in the low-200 bps area. The 10-year notes were talked in the mid-swaps plus 287.5 bps area, following initial talk of a spread in the high-200 bps to 300 bps.

Citigroup, HSBC, JPMorgan and NBK Capital are the global coordinators and joint bookrunners. Banca IMI, Mizuho Securities, MUFG and SMBC Nikko are also joint bookrunners for the Rule 144A and Regulation S deal.

Pricing is expected to take place on Thursday.

Equate is 85% owned by Petrochemical Industries Co. and Dow Chemical and produces essential chemical compounds as the largest petrochemical complex in Kuwait.

Sekerbank cancels deal

Turkey’s Sekerbank TAS canceled plans for a dollar-denominated issue of notes due 2026, following talk in the 10% area, a market source said.

Standard Chartered Bank was the bookrunner for the Regulation S deal.

Sekerbank is a lender based in Istanbul.

“The issuer set an optically attractive yield at 10% but appeared to have failed in gaining traction, as books only reached above $180 million,” the analyst said.

Said a trader: “Speaking to people that had taken some time to look at the credit metrics of the bank, they agreed that 10% was paying for the risk. The one thing 10% really does not cover you for is that underlying fear of a liquidity trap.”

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