Credito Real joins primary calendar; Bahrain’s sovereign curve better; Asia deals eyed

By Rebecca Melvin

New York, Jan. 18 – Riding a wave of improved sentiment created by two big sovereign deals pricing in the Latin America region this past week, Mexico’s Credito Real SAB de CV Sofom ER announced on Friday that it has selected banks and scheduled fixed-income investor meetings for a planned sale of intermediate duration dollar notes. The deal was seen pricing in the Jan. 21 week subject to market conditions.

The consumer finance company has mandated Barclays, Citigroup, Goldman Sachs and Morgan Stanley to arrange meetings in London, Boston, New York and Los Angeles.

Credito Real also announced a tender offer for up to $313 million of its $625 million outstanding of 7¼% senior notes due 2023.

The deal follows pricing this week of the Republic of Uruguay’s $1.25 billion of 4 3/8% bonds due 2031 at a tighter-than-expected yield spread of 175 basis points over U.S. Treasuries, and Mexico’s $2 billion 4½% 10-year notes, pricing at Treasuries plus 185 bps.

Also on the calendar for Latin America is a deal expected in the week ahead for Colombia’s Termocandelaria Power Ltd., which is expected to price around $400 million of U.S. dollar-denominated senior notes.

The improving fortunes of Latin America, which has been virtually shut down since early fall, has increased the likelihood of new deals from Petroleos Mexicanos SAB de CV and for sovereign Brazil, as well as corporate issuers, sources say.

Middle East in focus

Debt in the Middle East and Africa region was “very firm,” a London-based trader said. Bahrain was particularly strong again on Friday as the sovereign continued to recoup ahead of several of its issues being added to the JPMorgan emerging markets sovereign bond index on Jan. 31. The spreads for Egypt, Lebanon and Saudi Arabia were also much tighter on the day and for the week.

The bulk of Bahrain’s curve was between 10 bps and 30 bps tighter on the day, with the Bahrain 6¾% notes due 2029 quoted at 101¼ bid, 102¼% offered, with a yield spread that was tighter by 23.4 bps on the day and nearly 40 bps for the week and 39.4 bps for the month.

The Bahrain 5¼% notes due 2025 were tighter by 13 bps on the day, 19 bps on the week and 18.5 bps on the month.

Egypt’s sovereign note tightened across the curve on the day. The Egypt 5.577% notes due 2023 were quoted at 96.12 bid, 97.12 offered, which represented a yield spread that was 28.9 bps tighter on the day, 30.5 bps on the week and 39.5 bps on the month.

Egypt’s long-dated 2047 notes with an 8½% coupon were quoted at 93.5 bid, 94.5 offered and were 15.3 bps tighter on the day, 10.6 bps tighter on the week and 39.6 bps tighter on the month.

Lebanon’s longer-dated notes were modestly tighter on the day, after tightening in the past week from a blowout in spreads for the month. But the sovereign’s nearest-dated bonds were still seeing significant widening. The Lebanon 2020 6 3/8% notes were wider by 74.9 bps on the day, although tighter on the week by 20.9 bps. The bond was wider in terms of spread for the month by a whopping 691.7 bps.

Meanwhile, for the day, Lebanon’s 6.65% notes due 2028 were tighter by 8 bps and quoted at 72.52 bid, 74.52 offered.

Saudi Arabia’s sovereign curve was uniformly tighter on the month. But for the day, Saudi Arabia’s notes were firm to little changed. The Saudi Arabia 3¼% notes due 2026 represented the best performing note on the day. It was quoted at 94.62 bid, 94.87 offered with a spread that was tighter by 5.2 bps. The note is better by 18 bps on the week and 12 bps tighter on the month.

For the month, the best performing Saudi note is the short-dated 2 3/8% notes due 2021, which are 20.5 bps tighter for the month.

Other recent deals

Elsewhere, pricing emerged on a handful of deals for the Asia region.

India’s Bharat Petroleum Corp. Ltd. announced that it priced $500 million three-year senior notes with a 4 3/8% coupon. Proceeds of the Regulation S deal will be used for working capital.

Singapore’s DBS Group Holdings Ltd. priced $100 million of floating-rate notes due 2021 via J.P. Morgan Securities plc as lead manager.

Guangzhou R&F Properties Co. Ltd. was in the market for the second time this month, pricing $300 million of 9 1/8% senior notes due 2022 (//BB-) at 99.633. The property investment and development company priced $500 million of 2021 notes in early January.

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