E-CL sells notes; Turkey, LatAm corporates tighten; Dar al-Arkan underperforms; TSKB up

By Christine Van Dusen

Atlanta, Oct. 24 – Chile’s E-CL SA sold notes on a Friday that saw some tightening for bonds from Brazil’s Petroleo Brasileiro SA and Turkish corporates.

“A more positive tone this week, especially when compared to the volatility of last week,” a London-based analyst said.

But, he said, “Russia remains under pressure ahead of the weekend, which will see some major headlines out of Russia and Ukraine.”

Ukraine’s prime minister believes Russia will try to disrupt Ukraine’s parliamentary election this weekend, a vote that is expected to weaken pro-Russian power.

“In our view, events in the rebel regions will be more important, in particular whether those citizens are able to vote in those areas,” he said.

Russia was also impacted at the end of the week by news that Standard & Poor’s would release its rating decision on Friday.

“Clearly a downgrade could have potentially fairly strong repercussions on credit,” the analyst said, speaking before the rating announcement.

S&P’s decision, announced at late-morning New York time, was to affirm Russia’s current rating and maintain the negative outlook.

From Latin America, Petrobras’ 2019s, 2021s, 2024s and 2044s gapped tighter throughout Friday’s session, a New York-based trader said, and closed as much as 12 basis points tighter.

Corporate bonds from Chile stayed firm, even with the surge of supply from Chile’s SACI Falabella and Chile’s Sociedad Quimica y Minera de Chile SA (SQM).

Both traded up from the previous day’s levels, he said, with SQM’s notes seen at 99¾ on Friday morning after pricing at 99.41.

Argentina’s bonds were up between ¼ point and 2 points while Venezuela and PDVSA bonds ended lower, he said.

Overall, volumes for Latin American bonds were lighter than during previous days this week.

Turkey in focus

By Friday, Turkish sovereign paper narrowed, with the 2022s narrowing by 10 bps, the analyst said.

Turkish bank bonds also performed well, with Finans Bank AS’ (Finansbank) 2019s tightening by 21 bps and Yapi ve Kredi Bankasi AS’ 2017s moving in 18 bps.

Others from the sector underperformed, he said, including the 2019s from Turkiye Halk Bankasi (Halkbank), which narrowed by just 3 bps.

“Corporates were 11 bps tighter on average,” he said. “There was a notable pick-up in flow in the corporate space, which has been relatively quiet in recent months.”

He said the change likely stemmed from Fitch’s ratings affirmation earlier this month.

Middle Eastern bonds quiet

Bonds from the Middle East were mostly quiet on Friday, with Bahrain and Dubai standing out and banks tightening an average of about 5 bps during the week, the analyst said.

“Abu Dhabi banks also performed well,” he said. “Corporates were 5 bps tighter.”

The perpetual issue of notes from Global Education Management Systems Ltd. saw buyers and tightened about 32 bps, he said.

And investors showed interest in Kuwait Energy and Dubai’s Damac Real Estate Development Ltd.

One of the biggest underperformers from the region was Dar al-Arkan Holding, which saw its 2018s widen by 22 bps by the end of the week.

TSKB trades up

The new issue of notes from Turkey’s Turkiye Sinai Kalkinma Bankasi AS (TSKB) – $350 million 5 3/8% notes due 2019 that priced at 99.926 – rallied on Friday, a trader said.

“They’re trading up over 1 point above re-offer,” he said. “We still see value, given the strong fundamentals and a key role for the economy.”

The notes came to the market with a yield of 5.392%, or mid-swaps plus 380 bps, via bookrunners Citigroup, Commerzbank, ING and Standard Chartered Bank in a Regulation S deal.

The final book was more than $1.3 billion.

E-CL revives deal

In its new deal, Chile’s E-CL priced a $350 million issue of 4½% notes due Jan. 29, 2025 at 99.455 to yield 4.568%, or Treasuries plus 230 bps, a market source said.

The notes were talked at a spread in the 250 bps area.

BofA Merrill Lynch, Citigroup, HSBC, BTG Pactual and Credit Agricole CIB were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for the repayment of outstanding project financing loans and costs arising from the early termination of related interest-rate swaps.

E-CL is a Santiago, Chile, holding company with assets in electricity and natural gas.

© 2015 Prospect News.
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