Issuance seen from Dubai Islamic Bank, Hong Kong, CIFI, others; risk-off mode in effect

By Christine Van Dusen

Atlanta, May 27 – Dubai Islamic Bank PJSC, Hong Kong, China’s CIFI Holdings (Group) Co. Ltd., China’s Fantasia Holdings Group Co. Ltd. and Garuda Indonesia (Persero) Tbk were among the issuers to print notes on Wednesday against the backdrop of a strong dollar and a Greece-inspired flight to quality.

“Asian markets saw some sellers out of New York and no buyers of the small dip to take the other side of the trade, leaving the high-grade space 2 basis points to 5 bps wider,” a London-based trader said.

Real-money accounts from Asia were mostly sidelined on Wednesday, amid the widening, but European accounts “took this as an opportunity, and the market bounced off the lows,” he said.

The curve for China-based Cnooc Ltd. closed Wednesday wider by 5 bps, with good two-way flow seen for the company’s 2024s, he said.

Most investment-grade names from Asia were “generally stable, with Korea unchanged with buyers in the short end, India a couple basis points wider and Malaysia 1 bp to 3 bps wider on light flow,” he said.

Among high-yield names, property companies moved 1/8 point to 3/8 point lower on Thursday, he said.

Looking to Latin America, trading was quieter than on Tuesday and felt “a little sluggish,” a New York-based trader said.

Pacific Rubiales Energy Corp., which has been getting a lot of attention amid a contentious takeover plan, was “dead quiet” on Wednesday as investors continued to digest the most recent headlines.

Mexico-based Alfa SAB de CV and Harbour Energy Ltd. have teamed up to take over Pacific Rubiales for about $5.30 a share in an all-cash deal that was unanimously approved by the board of directors. The group of Venezuelan investors with a 19.5% stake in Pacific Rubiales does not want the deal to go forward and plans to vote against it.

Lat-Am in focus

Also on Wednesday, Colombia’s Ecopetrol SA was trading with lower volumes after the company announced its new and less aggressive 2020 business plan, he said.

Banks from Colombia traded with a strong tone while high-grade names from Brazil went quiet, he said.

High-grade names from Chile remained strong, with limited liquidity.

Also on Wednesday, market-watchers were whispering about a possible issue of euro-denominated green bonds from Latvia-based Latvenergo, a dollar-denominated bond from Sri Lanka and dollar notes from India-based Sun Pharmaceutical Industries Ltd.

Dubai Islamic Bank sells bonds

Dubai Islamic Bank priced $750 million 2.921% notes due in 2020 at a spread of mid-swaps plus 125 bps, a market source said.

The notes were initially talked at a spread in the 140-bps area.

Dubai Islamic Bank, First Gulf Bank, HSBC, Maybank, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Primary hosts Fantasia

China’s Fantasia Holdings sold $200 million 11½% notes due June 1, 2018 at 99.26 to yield 11.08%, a market source said.

BofA Merrill Lynch, China Merchants Securities, Citic CLSA Securities, Deutsche Bank and UBS were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance existing debt.

Fantasia Holdings is a property development company based in Shenzhen, China.

Hong Kong prices bonds

Hong Kong sold $1 billion 1.894% Islamic bonds due in 2020 (expected ratings: Aa1/AAA/) at a spread of Treasuries plus 35 bps, according to an announcement from the sovereign.

The notes priced at the tight end of talk, set at 35 bps to 40 bps.

HSBC and Standard Chartered Bank were the joint global coordinators for the Regulation S deal. CIMB and National Bank of Abu Dhabi were the other joint bookrunners.

The notes attracted a final order book of $2 billion from 49 global institutional investors, with 42% from the Middle East, 43% from Asia and 15% from Europe.

About 77% of the orders were picked up by banks, private banks and fund managers while 23% went to sovereign wealth funds, central banks and supranationals.

Indonesian airline sells notes

Garuda Indonesia (Persero) sold $500 million 5.95% notes due June 3, 2020 at 99.256 to yield 6 1/8%, or mid-swaps plus 444.7 bps, a market source said.

Pricing matched talk.

National Bank of Abu Dhabi, Al Hilal Bank, ANZ, Deutsche Bank, Dubai Islamic Bank, ENBD Capital, First Gulf Bank, Maybank Investment Bank, Noor Bank, Sharjah Islamic Bank, Standard Chartered Bank and Warba Bank were the bookrunners for the Regulation S deal.

The issuer is an airline based in Tangerang.

CIFI does deal

Shanghai-based CIFI Holdings priced $400 million notes due June 5, 2020 at 99.491 to yield 7 7.8%, a market source said.

The notes were initially talked at a yield in the 8 1/8% area.

Standard Chartered Bank, HSBC, Citigroup, Credit Suisse, Haitong International and UBS were the bookrunners for the Regulation S sale.

CIFI will use proceeds to refinance debt, to acquire new projects or land for development, to develop new projects and for general corporate purposes.

“We see fair value at 7 7/8%, versus initial price guidance of 8 1/8%, given that CIFI’s 2019 is currently indicated at 7.6% bid,” a London-based trader said. “The smallish deal size – at $300 million minimum – is a plus, although CIFI has tapped and upsized its bond before and we would not totally rule out this risk, given the relatively aggressive expansion plan this year.”

CIFI’s curve is currently trading “relatively tight, versus other single-B names,” he said, “especially in light of its current expansion phase, which would most likely lead to higher gearing. But we think it will continue to be supported in the near term by its diversified funding channels, partnership with blue-chip developers and established growth track record.”

Guangzhou Communications talk

China’s Guangzhou Communications Investment Group Co. Ltd. set talk in the Treasuries plus 230-bps area for a dollar-denominated issue of benchmark-sized notes due in three years, a market source said.

DBS and Deutsche Bank are the bookrunners for the Regulation S deal, which will be issued by Express (BVI) 2015 Ltd.

The proceeds will be used for working capital and general corporate purposes.

The issuer invests in and manages transportation projects.

Egypt schedules roadshow

Egypt will set out on Thursday for a roadshow to market an issue of notes, a market source said.

BNP Paribas, Citigroup, JPMorgan, Morgan Stanley and Natixis Securities are the bookrunners for the Rule 144S and Regulation S deal.

The roadshow will be held in the Middle East, the United States and Europe.

Roadshow for NongHyup Bank

South Korea’s NongHyup Bank will hold a roadshow during the week of June 1 for a possible issue of notes, a market source said.

Citigroup, Commerzbank, HSBC and Societe Generale CIB are arranging the marketing trip.

NongHyup Bank is a Seoul, South Korea-based agricultural and commercial credit and banking services company.

Embraer plans issuance

Brazil’s Embraer SA – through Embraer Netherlands Finance BV – is planning to issue dollar-denominated notes, according to a company filing.

Citigroup and Morgan Stanley are the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general corporate purposes.

Embraer is an aircraft manufacturer based in Sao Jose dos Campos, Brazil.

Ukraine comes to market

On Tuesday, Ukraine priced $1 billion 1.847% notes due May 29, 2020 at par to yield 1.847%, or Treasuries plus 32 bps, a market source said.

Citigroup, JPMorgan and Morgan Stanley were the bookrunners for the deal.

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