Oman, Cemex, Ecopetrol, Fibra Uno tap market; oil prices lift sentiment; calendar builds

By Christine Van Dusen

Atlanta, June 8 – Oman, Mexico’s Cemex SAB de CV, Colombia's Ecopetrol SA and Mexico’s Fibra Uno sold notes on Wednesday as emerging markets assets remained resilient, even after the World Bank cut its projections for global growth and China released economic data that showed a decline in exports.

“Any slight disappointment, if at all, is overruled by oil prices climbing further above $50 a barrel and the diminishing prospect of a U.S. rate hike in the foreseeable future,” a London-based strategist said.

In trading on Wednesday, Latin American bonds fared well but finished off their highs and tights as sellers emerged in the late afternoon, a New York-based trader said.

Brazil's five-year credit default swaps spreads closed at 326 basis points from 328 bps after trading as low as 320 bps, and Mexico's were unchanged at 156 bps after trading as tight as 151 bps.

“Cash prices get a boost from the continued United States Treasury rally, as well as modest spread-tightening,” he said. “The market still seems to be chasing paper.”

High-yield names finished mixed on the day, with PDVSA's 2017s closing at 69.50 from 69.75 and Venezuela's 2027s up at 45.50 from 45.

Argentina's Bonar 2024s were mostly unchanged at 113.50 and the 2026s were down at 105.75 from 106.50, he said.

“With oil, equities, U.S. Treasuries, and [EM currencies] all firm, Lat-Am credit continues to have a strong tailwind, as the negative rate environment in the developed world drives fixed income investors into a higher-yielding asset class,” he said.

A London-based trader noticed similar trends on Wednesday. “Very supportive day, tone, moves, inquiry today across the board,” he said.

Buyers seen in the morning

Buyers outpaced sellers of Middle Eastern bonds in the morning, a trader said, with some activity for the recent $9 billion issue of notes due 2021, 2026 and 2046 from Qatar, the London trader said.

The $3.5 billion 2 3/8% five-year notes priced at 98.924 to yield Treasuries plus 120 bps after talk in the 125 bps area.

The $3.5 billion 3¼% 10-year notes priced at 98.963 to yield Treasuries plus 150 bps after talk in the 155 bps area.

And the $2 billion 4 5/8% 30-year notes priced at 97.606 to yield Treasuries plus 210 bps after talk in the 215 bps area.

“The 30-year continues to attract interest now in the 102.62 to 102.87 context, with further Asian demand this morning,” he said.

CBQ trades well

The recent issue of bonds from Commercial Bank of Qatar QSC – $750 million 3¼% notes due June 13, 2021 that priced at 99.384 to yield 3.385%, or mid-swaps plus 215 bps – had “a good feel to it,” a trader said.

The notes priced tighter than talk, initially set in the mid-swaps plus 237.5 bps area.

Citigroup, HSBC, Morgan Stanley and National Bank of Abu Dhabi were the bookrunners for the Regulation S deal.

The notes closed the European session at 100.12 bid, 100.25 offered “on good Street and retail demand,” he said.

Long bonds in demand

Long-dated bonds from the Middle East remained in demand, with DP World's 2037s at 107.12, tighter by 35 bps over the month, a trader said.

The company's 2023s “managed to get back to par today, having traded at 99 last week,” he said.

Bahrain continues to trade well, he said.

Tunisia gets nibbles

Meanwhile, there was “a little bit of nibbling for some North African names,” a trader said, pointing to Tunisia and Egypt.

“Broader markets have a very solid tone,” he said. “I can't help thinking that once this supply clears, [the Gulf region] space could rally further into and through the summer, probably until the big one – Saudi Arabia – comes later in the year.”

Investors were also whispering about possible issues from Emaar Properties, Ghana and Egypt.

“Nigeria’s Finance Minister Adeosun met investors in London yesterday and might return to markets with a $1 billion eurobond in the third quarter,” the strategist said.

Ukraine curve moves higher

From Ukraine, the sovereign curve has pushed slightly higher so far this week, said Fyodor Bagnenko, a fixed-income trader from Dragon Capital.

“It was buyers’ reluctance to chase prices higher, rather than really heavy supply, that slowed the rally,” he said.

This came amid news that the International Monetary Fund would set the size for the next tranche of bailout funds for Ukraine at the IMF board meeting in July.

Turkey tightens

Looking to Turkey, bonds moved tighter, a trader said.

“The Turkey curve moves more in line with other liquid EM sovereign curves,” he said. “Sovereign curves are all helped by [Turkey's recent] $1.5 billion re-tap of the 2045s.”

That issue of 6 5/8% notes priced at 117.781 to yield 5.4% via BNP Paribas, Goldman Sachs and JPMorgan in a Securities and Exchange Commission-registered deal.

“Off-the-run 2034s through 2038s could leak wider versus the curve as accounts move into more liquid on-the-run parts of the curve,” he said. “Turkey, on valuation, seems OK – neither rich nor cheap – so it should just market-perform from here. But it may outperform if we get a retrace on commodities and China.”

Banks and corporates from Turkey were attempting to catch up to the sovereign, the trader said.

The bonds have been “outperforming in places,” he said. “There definitely feels like there are inflows in the corporates space, and the supply picture seems far tighter there.”

Oman sells notes

Oman priced a two-tranche issue of $2.5 billion notes due June 15, 2021 and 2026, an informed source said

The $1 billion 3 5/8% five-year notes priced at 99.887 to yield mid-swaps plus 245 bps, following talk in the 262.5 bps area.

The $1.5 billion 4¾% 10-year notes priced at 99.827 to yield mid-swaps plus 320 bps, following talk in the 337.5 bps area.

Citigroup, JPMorgan, MUFG, National Bank of Abu Dhabi and Natixis were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general budgetary purposes.

Cemex does deal

Mexico-based cement producer Cemex sold €400 million notes due 2024 at par to yield 4 5/8%, a market source said.

The notes were talked at 4 5/8%.

BNP Paribas, Credit Agricole CIB and JPMorgan were the active bookrunners and RBS the passive bookrunner for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Fibra Uno prices bonds

Mexico’s Fibra Uno priced $500 million in taps of its 5¼% notes due Jan. 30, 2026 and its 6.95% notes due Jan. 30, 2044, a market source said.

The 5¼% notes due 2026 priced at Treasuries plus 345 bps.

The 6.95% notes due 2044 priced at Treasuries plus 435 bps.

BBVA, Deutsche Bank and Goldman Sachs were the active bookrunners. BofA Merrill Lynch, Credit Suisse, HSBC and Itau were the passive bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes, including the acquisition of additional properties and repayment of debt.

Other details were not immediately available on Wednesday.

Fibra Uno acquires, develops and operates commercial real estate in Mexico.

Ecopetrol sells tap

Colombia's Ecopetrol priced a $500 million tap of its 5 7/8% notes due Sept. 18, 2023 at 101.612 to yield 5.6%, or Treasuries plus 409.6 bps, according to a company filing.

BofA Merrill Lynch and HSBC were the bookrunners for the SEC-registered deal.

The proceeds will be used for general corporate purposes, including capital expenditures.

Ecopetrol is a Bogota, Colombia-based petroleum company.

Steel Funding eyes market

Russia’s Steel Funding Ltd. is planning to issue dollar-denominated loan participation notes, according to a company announcement.

The note proceeds from the issuer will be lent to parent company OJSC Novolipetsk Steel (NLMK).

NLMK is based in Lipetsk, Russia.

Tianjin attracts orders

The final order book for China-base Tianjin Infrastructure Construction & Investment (Group) Co. Ltd.'s $500 million 2¾% three-year notes that priced Tuesday at 99.854 to yield Treasuries plus 187.5 bps was more than $1.1 billion from 79 accounts, a market source said.

Bank of China and BNP Paribas were the bookrunners and – along with CCBI, Haitong International, ICBCI and Wing Lung Bank – the joint global coordinators for the Regulation S deal.

The proceeds will be used for general corporate purposes.

The bonds were fairly inactive in the secondary market, trading at 210 bps bid, 201 bps offered, a trader said.

China State Construction book

China State Construction Engineering Corp. released the final book for the two-tranche, $1 billion issue of three- and five-year notes that priced on Tuesday.

The deal included $500 million 2¼% notes due 2019 that priced at 99.738 to yield 2.341%, or Treasuries plus 142.5 bps. That tranche attracted $1.18 billion from 61 accounts, a market source said.

The $500 million 2.7% notes due 2021 priced at 99.763 to yield 2.751%, or Treasuries plus 152.5 bps. That tranche brought in $1.14 billion in orders from 40 accounts.

HSBC, Citigroup, Goldman Sachs, CCB International, UBS, BOC International, BNP Paribas, BofA Merrill Lynch and ICBC International were the bookrunners for the Regulation S deal.

The proceeds will be used for financing overseas projects and other general corporate purposes.

The issuer is a Hong Kong-based construction contractor.

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