Wuzhou, Posadas, Mongolia issue notes; investors fatigued by Greece; Asian bonds weaker

By Christine Van Dusen

Atlanta, June 25 – China’s Wuzhou International Holdings Ltd., Mexico’s Grupo Posadas SAB de CV and Mongolia printed notes on a mostly quiet Thursday for emerging markets assets as investors showed fatigue, caused by the continuing economic crisis in Greece.

“It increasingly seems the market is tired of mixed messages, and any outcome will be a relief,” a London-based trader said.

Trading of notes from Asia was “very tame” on Thursday morning, he said. “But after the extensive spread rally seen over the past week and a half, some give-back is expected.”

Bonds from Philippines were slightly weaker, down about 1/8 point in the belly of the curve and ¼ point on the long end, he said.

“Couple of dealers exiting longs this morning, following some overnight customer selling on the longer end,” he said.

Later in the day, activity picked up a bit as Treasuries stabilized, another trader said.

“However, the general tone remains weak for Asia credit overnight,” he said. “Sovereigns are better-offered across Indonesia and Philippines, but seeing small buyers on the Sri Lanka and Mongolia front.”

High-grade corporate bonds from Asia were up or down 2 basis points across the board, he said.

“High-yield property remained firm, but we’re starting to see sellers on the short-dated industrial high-yield front as valuations are reaching highs again.”

In deal-related news, market sources were whispering about possible issues of notes from Korea Gas Corp., Korea National Oil Corp., PT Apexindo Pratama Duta Tbk and India’s NTPC Ltd.

Ukraine in focus

In other trading, sovereign bonds from Ukraine have so far this week seen some gains on the long end of their curve, as well as some two-way flow for the 2016s and 2017s, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

Quasi-sovereign bonds from Ukraine have been more balanced, Bagnenko said.

Lat-Am unchanged, or bit wider

Looking to Latin America, low-beta sovereign spreads finished the session mostly unchanged to slightly wider, a New York-based trader said.

“Brazil underperformed today, with some negative headlines regarding both the economy and politics flashing throughout the morning which soured sentiment on Brazil credit, stocks, and the real,” he said.

Five-year credit-default swaps spreads for Brazil moved to 260 bps from 256 bps while Mexico’s narrowed a tiny bit, to 91.08 from 91.10.

High-yield names from region moved lower, with Venezuela’s 2027 trading at 44.90 from 45¼, amid better selling.

Odebrecht dips again

Bribery concerns arose again in Brazil on Thursday, causing bonds from Odebrecht SA to resume their decline, another New York-based trader said.

Other high-yield names dipped in solidarity, he said, while Pacific Rubiales Energy Corp.’s curve was slightly weaker.

Bank paper from Colombia, Mexico and Chile was quiet again, he said.

Wuzhou prints add-on

In its new deal, Hong Kong-based real estate developer Wuzhou issued a $100 million add-on to its existing 13¾% notes due in September of 2018 at par to yield 13¾%, a market source said.

The additional notes will be consolidated and form a single class with the existing notes.

The company priced $100 million of the notes on Sept. 26, 2013 at 99.122 to yield 14% and $100 million more of the notes at par on Jan. 15, 2014.

Credit Suisse, Guotai Junan International and UBS were the bookrunners for the new tranche of Regulation S notes.

Proceeds will be used to repay debt and for general corporate purposes.

Mongolia sells notes

Mongolia on Thursday priced RMB 1 billion 7½% notes due in three years at par to yield 7½%, a market source said.

Citic CLSA Securities, HSBC, ING, TDB Capital, Ulaanbaatar Capital and China Citic Bank were the bookrunners for the Regulation S deal.

The proceeds will be used to fund mining and infrastructure projects.

Posadas prices bonds

Thursday also saw Mexico’s Posadas print a $350 million issue of 7 7/8% notes due in 2022 at par to yield 7 7/8%, a market source said.

The notes were talked in the 8% area.

Citigroup, BofA Merrill Lynch and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Guidance from Jordan

Jordan set talk for a two-tranche issue of dollar-denominated and U.S. AID-backed bonds due in seven and 10 years, a market source said.

The deal includes $1 billion seven-year notes that were talked at spread in the Treasuries plus 60-bps area.

The $500 million 10-year notes were talked at a spread in the 80-bps area.

The proceeds will be used to reinforce Jordan’s economic reform program, in accordance with a loan guarantee agreement with the United States.

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