Singapore's Suntec on roadshow for notes; liquidity 'dire'; 30-year notes get some support

By Christine Van Dusen

Atlanta, Aug. 19 - Singapore's Suntec REIT MTN Pte. Ltd. set out on a roadshow on a Monday marked by slightly wider spreads, lower prices and thinner liquidity for emerging markets assets.

"Another quiet August week kicks off with 10-year Treasuries still around the 2.85% area ahead of the Federal Open Market Committee meeting on Wednesday," a London-based analyst said. "EM spreads a touch wider on minimal flow."

The Markit iTraxx SovX CEEME ex-EU index spread on Monday opened at 245 basis points over Treasuries, wider by 5 bps from Friday. The Markit iTraxx Crossover index spread - seen Friday at 410 bps - moved out 6 bps to a 416 bps spread on Monday.

"Given the move in rates, we have seen there has been limited selling pressure on EM," the analyst said. "Turkey sovereign cash bonds are 5 bps to 10 bps wider, although there has been some small private bank buying interest."

Liquidity on Monday was "dire," a London-based trader said.

"Asset prices are marked lower versus Friday," he said. "Definitely some of the more better-placed, squeezed bonds feel like they are coming out, which I think makes sense - sell the still-rich bonds, or the ones that are holding in better, and move out to the more beaten-up four- to six-year bonds."

Investors showed some support for dollar bonds with a 2043 maturity, he said.

"Really only a handful of trades took place in the Street today, with bids and offers widening," he said. "Did see a small switch take place with us from Abu Dhabi Commercial Bank's 4½% into the 3 1/8%, picking up nearly 150 bps and taking out cash for the same maturity, same bank. Probably makes sense."

Cautious mood

Emerging markets investors are likely to remain in a cautious mood, given the Treasury moves, according to a report from Commerzbank.

"Emerging markets are going to face rough waters," the report said. "We continue to recommend 'new money' to stay on the sidelines, and we continue to prefer positioning for differentiation within EM."

Middle East in focus

Taking a look at the Middle East, the perpetual notes from Abu Dhabi Islamic Bank opened Monday at 99½ bid, 100½ offered after the previous week's levels of 100½ bid, 101½ offered, a London-based trader said.

The notes priced at par.

Dubai Islamic Bank's perpetuals, which also priced at par, moved to 96 bid, 97 offered after the previous week's 96¾ bid, 97¾ offered.

"Saudi Electricity Co. still trades heavy, with the 2022s and 2023s now 30 bps wider on the month into this falling Treasury market," a trader said.

Nigeria up from reoffer

From Africa, Nigeria's recent $500 million 5 1/8% notes due 2018 traded Monday at 101.62 bid, 102.62 offered after pricing at 98.917 to yield 5 3/8%.

The second tranche of that same deal - $500 million 6¾% notes due 2023 - was quoted Monday at 106¼ bid, 107½ offered. The notes priced at 98.193 to yield 6 1/8%.

The proceeds will be used to finance infrastructure investments.

Afreximbank up, Morocco down

Cairo-based African Export-Import Bank (Afreximbank) saw its issue of 5¾% notes due 2016 trade at 105.62 bid, 106.62 offered on Monday, a trader said.

The notes priced at par via Commerzbank, HSBC, Mitsubishi UFJ Securities and Standard Bank in a Regulation S deal.

Morocco's 2022 notes, which priced at 100.263, moved to 86¾ bid, 88¼ offered on Monday.

The sovereign's 5½% 2042 notes traded Monday at 81 bid, 82½ offered after pricing at 97.464.

Barclays, BNP Paribas, Citigroup and Natixis were the bookrunners for the Rule 144A and Regulation S deal.

Ukraine sovereigns unchanged

From Ukraine, sovereign bonds entered the new week unchanged, said Svitlana Rusakova of Dragon Capital.

Corporates were more active, with sellers seen for the 2018 notes from the State Administration of Railways Transport of Ukraine (Ukrzaliznytsia) and the State Export-Import Bank of Ukraine (Ukreximbank).

Raspadskaya gets downgraded

One trader was watching bonds from Russia-based Raspadskaya OAO after Moody's Investor Service downgraded the coal producer from B1 to B2 with outlook negative.

"Does not come as a surprise to us," she said. "We have held a negative view on Raspadskaya for over a year, expecting market conditions to remain challenging."

The company, majority-owned by Evraz Group, has faced a difficult financial situation, she said, and recently suffered the temporary closing of its main mine.

"Raspadskaya's 2017s are trading at z-spread plus 650 bps, and although the spread prices in the challenges faced by the credit, we note that both Evraz and Raspadskaya have actually tightened over the last month," she said. "Raspadskaya is 25 bps tighter."

Tanzania revises plans

The Republic of Tanzania has revised its plans for a notes offering, setting the size at a maximum of $700 million and the timing at the first half of 2014, a market source said.

The sovereign previously announced plans for up to $2 billion of notes during this year.

And Singapore's Suntec out on Monday for a roadshow to market a dollar-denominated issue of notes with Australia and New Zealand Banking Group Ltd., Citigroup Global Markets Singapore Pte. Ltd., DBS Bank Ltd. and Standard Chartered Bank.

Proceeds from the Regulation S notes will be used to refinance the group's borrowings, to finance or refinance acquisitions and investments, to finance asset enhancement works and for general corporate purposes.

Bolivia deal oversubscribed

The final book for Bolivia's recent issue of $500 million 5.95% notes due 2023 was $900 million, a market source said.

The notes priced at 97.794 to yield 6¼%, or Treasuries plus 347.5 bps via BofA Merrill Lynch and HSBC in a Rule 144A and Regulation S deal.

The proceeds will be used for general governmental purposes and infrastructure projects.

Asian investors took up almost half of the issue, according to a report from Commerzbank.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.