EM assets end week on softer note as economic concerns persist; Bancomer plans roadshow

By Christine Van Dusen

Atlanta, July 6 - Emerging markets assets finished the week on a somewhat weaker note as the United States released a worse-than-expected jobs report for June and investors weren't particularly placated by policy changes in China, the euro area and the United Kingdom.

"Central banks from three of the largest global economies eased policy," according to a report from Barclays Capital. "Despite their efforts, risky assets across markets are trading weaker, [volatility is] higher and Spanish sovereign yields are now once again uncomfortably high."

That is because the market was expecting these efforts, the report said.

"The global macro climate remains weak and investors wait for more concrete policy decisions in Europe," Barclays said.

Against this backdrop, the bank is recommending investors put their money to work in longer-duration paper from the Republic of the Philippines, move from the 10-year to the 30-year sector for bonds from Turkey and switch from South Africa's 2041 bonds into the sovereign's 2019 and 2020 bonds.

"In Latin America, we continue to favor the liquid low-beta bonds [from] Brazil, Mexico and Colombia, with the long-end of the latter screening as particularly attractive," the report said.

In other news, emerging markets bond funds reported inflows of $874 million for the week ended July 4, according to a report from data tracker EPFR Global.

That figure is up from $671 million for the week ended June 27, when the bulk of the dollars - $538 million - went into emerging markets bond funds with a hard currency mandate.

This week, the flows were split roughly five-to-two between hard currency and local currency, said Cameron Brandt, director of research with EPFR.

Emerging markets bond funds managed to push "the year-to-date total in striking distance of the $24 billion mark," EPFR said.

Emirates Islamic closes up

The recent deal from Dubai's Emirates Islamic Bank - a $500 million issue of 4.147% notes due Jan. 11, 2018 that priced at par - closed Friday about 5 basis points tighter than launch, a trader said.

Emirates NBD Capital, Credit Agricole, Dubai Islamic Bank, HSBC and Standard Chartered were the bookrunners for the Regulation S-only deal.

The notes opened Friday at 100.40 bid, 100.55 offered and hit a high print of 100.85 before closing the week at 100.30 bid, 100.55 offered.

"I guess once the loose bonds fall into the hold-to-maturity and sukuk hands, it will be OK," he said. "But I never really got too excited about this one."

Bahrain notes in focus

The Kingdom of Bahrain's recent $1.5 billion issue of 6 1/8% notes due July 5, 2022 - priced at 99.867 to yield 6.143%, or mid-swaps plus 437.5 bps - was trading at 100.50 bid, 100.70 offered on Friday.

On Thursday, the notes were seen at 100.57 bid, 100.77 offered.

Citigroup, Gulf International Bank, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

And the $500 million issue of 5¼% seven-year notes from Dubai's Majid al Futtaim that came to the market at par was seen 100.30 bid, 100.55 offered after trading Thursday at 100.30 bid, 100.65 offered.

JPMorgan, National Bank of Abu Dhabi, Barclays Capital, Standard Chartered and UBS were the bookrunners for the Regulation S transaction.

IPIC 2041s stay at high

In other trading from the Middle East, Abu Dhabi's International Petroleum Investment Co.'s 2021 bonds, which were quoted Thursday at 109.25 bid, 109.75 offered, were seen Friday at 109.50 bid, 110.25 offered.

IPIC's 2041 bonds hit a new high of 120.25 on Thursday and stayed strong on Friday, trading at 120.25 bid, 121.25 offered.

Saudi Arabia-based Islamic Development Bank's recent five-year $800 million sukuk that priced at par was quoted Friday at 99 bid, par offered, unchanged from Thursday.

VEB notes unchanged

The recent issue of €950 million 4¼% notes due July 9, 2017 from the Republic of Bulgaria was trading Friday at 100.50 bid, 100.70 offered.

The notes priced at 99.182 and on Thursday were quoted at at 100.59 bid, 100.69 offered.

The notes came to the market at a spread of mid-swaps plus 350 bps via BNP Paribas, HSBC and Raiffeisen Bank in a Regulation S deal.

Russian lender Vnesheconombank (VEB)'s $1 billion 6.025% notes due July 5, 2022 traded at 102.50 bid, 103 offered on Friday, unchanged from Thursday.

Credit Agricole, JPMorgan, Deutsche Bank and HSBC were the bookrunners for the deal.

Temir Zholy moves higher

From Kazakhstan, the $800 million 6.95% notes due 2042 from railway operator Kazakhstan Temir Zholy Finance BV were trading Friday at 103.50 bid, 104.50 offered.

The notes priced July 2 at par to yield 6.95%, or Treasuries plus 427.5 bps via Barclays Capital, HSBC and Kazkommerts Securities in a Rule 144A and Regulation S deal.

JSC Development Bank of Kazakhstan also brought a deal to the market this week. The bank priced on Monday an $800 million issue of 6.95% notes due 2042 at par to yield 6.95%, or Treasuries plus 427.5 bps.

JSC Halyk Finance, HSBC and RBS were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for financing investments.

Yieh Phui sells notes

Also this week, Taiwan-based steel producer Yieh Phui Enterprise Co. Ltd. priced RMB 275 million notes due July 9, 2014 at par to yield 4½%, a market source said.

The notes priced on Thursday in line with talk, set at the 4½% area.

BNP Paribas was the bookrunner for the Regulation S notes.

In other deal-related news, Mexico City-based BBVA Bancomer will meet with investors in Hong Kong and New York on July 9, Singapore and Boston on July 10 and Los Angeles and Chicago on July 11, according to a market source.

BBVA, Bank of America Merrill Lynch and Goldman Sachs are arranging the meetings.

Aleesia Forni and Paul A. Harris contributed to this report.

© 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.