Bahrain, SP PowerAssets, Stats ChipPAC sell notes; risky assets feel firm; Ukraine sees demand

By Christine Van Dusen

Atlanta, Nov. 17 – Bahrain and two Singapore-based corporates – SP PowerAssets Ltd. and Stats ChipPAC Ltd. – sold notes on Tuesday as oil prices recovered from recent lows and riskier assets from developed markets got a bounce.

“Emerging markets cash feels firmer as real money continues to put cash to work and buys on the dips,” a London-based trader said.

Bonds from Turkey and South Africa were a few basis points tighter at the open, he said.

“The Turkey sovereign continues to trade well, even with rates backing up,” he said.

From Latin America, Brazil-based Petroleo Brasileiro SA and Vale SA were both tighter on Tuesday morning as much of the rest of market firmed up a bit, a New York-based trader said.

“Inquiry has picked up a little,” he said, noting that Petrobras was seeing buyers again.

Other Brazilian corporates were unusually quiet, he said.

Chile-based Corporacion Nacional del Cobre de Chile (Codelco) also improved while copper declined, he said.

Mexico’s Cemex SAB de CV looked firmer after a sell-off in recent sessions, he said.

“A positive feeling still remains regarding global infrastructure needs in 2016 and 2017, which should give a nice layer of support for the credit,” he said. “Turkey banks are trading better, as valuations widened out to more attractive levels versus the sovereign.”

In other news, President Vladimir Putin “softened his stance” on the $3 billion Ukrainian eurobond owned by Russia and initially due Dec. 15, a trader said.

He offered to “settle the debt in $1 billion tranches from 2016 to 2018,” he said.

In response, Ukraine bonds have experienced some demand. That has been particularly so for the 2019s and 2027s, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

Bahrain prices notes

In its new deal, Bahrain priced a two-tranche issue of $1.5 billion notes due Jan. 26, 2021 and 2026, a market source said.

The $700 million 5 7/8% notes due 2021 priced at par to yield 5 7/8%, following talk in the high-5% area.

The $800 million 7% notes due 2026 priced at par to yield 7%, following talk in the 7% area.

Bank ABC, BNP Paribas, Citigroup, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Prior to the pricing, a trader said, “We consider the initial price talk as interesting compared to the current Bahrain curve, but think that there might not be massive upside should the issuer tighten to levels below 5¾%, versus the current levels of the Bahrain 2020s.

Bahrain’s timing questioned

Bahrain’s long 10-year notes were talked at a yield in the 7% area.

The talk looked “fair versus Bahrain’s 6 1/8% 2023s at about 6.1% and Bahrain’s 6% 2044s at 7.8%,” the trader said. “We think that the issuance amount will play a significant role.”

The trader was pegging the deal size at a maximum of $2 billion.

“We think that a smaller issuance size – $1.5 billion or below – would be supportive for the transaction,” he said.

Bank ABC, BNP Paribas, Citigroup, HSBC and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

“The timing of the issuance is not optimal, given the recent concessions issuers in the Middle East have paid, and the low oil price environment,” the trader said. “Yet, with Saudi Arabia potentially tapping international markets next year and two rating reviews on Dec 11, we think Bahrain might prefer to issue now at the cost of some concession to bondholders.”

Issue from PowerAssets

In its new deal, Singapore’s SP PowerAssets priced $700 million 3¼% notes due Nov. 24, 2025 at 99.754 to yield Treasuries plus 98 bps, a market source said.

Deutsche Bank and Morgan Stanley were the bookrunners for the Rule 144A and Regulation S deal.

Based in Mapletree Business City, Singapore, SP PowerAssets is a member of Singapore Power Group, which provides electricity and gas transmission and distribution services.

Stats ChipPAC sells bonds

Singapore-based Stats ChipPAC sold $425 million 8½% notes due Nov. 24, 2020 at par to yield 8½%, a market source said.

Barclays, Deutsche Bank and ING were the bookrunners for the Rule 144A and Regulation S deal.

The semiconductor test and advanced packaging service provider plans to use the proceeds to repay outstanding debt, including borrowings under its $890 million bridge loan facility, entered into on Aug. 6, 2015.

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