Greece makes market defensive; Pacific Rubiales in news; Asian deals suffer; Baidu gets orders

By Christine Van Dusen

Atlanta, June 26 – Greece remained on the market’s mind on Friday morning, following the previous day’s inconclusive talks about the sovereign’s debt bailout, which kept emerging markets assets in a defensive mood.

“The euro group reportedly decided to meet again for more talks on Saturday,” according to a report from Barclays Research. “While the risk of a default next week has increased again, we still believe that a solution should be found.”

Asian bonds finished the challenging week with investment-grade spreads unchanged to a couple of basis points wider, a London-based trader said.

“Recent issues that printed this week suffered the most,” he said. “The rest of the sectors were stable, with India closing unchanged and short-end financials in demand. Korea is a couple wider.”

Meanwhile, Latin American bonds saw more sellers than buyers on Friday morning, a New York-based trader said.

And Ukraine saw two-way action for its sovereign bonds, with most of the action focused on the 2017s and 2022s, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

Also on Friday, Latin America-focused Pacific Rubiales Energy Corp. received attention again, this time after Mexico’s Alfa SAB de CV could sell its 20% stake in Pacific Rubiales and won’t raise the takeover offer made with Harbour Energy Ltd.

And yet another group recommended that shareholders reject the takeover bid. This time it was Glass, Lewis & Co., following the same recommendation issued by Institutional Shareholder Services.

In response, Pacific Rubiales’ bonds have fallen, a trader said.

“Pacific Rubiales again is a bit weaker this morning, but I’m really only seeing that weakness in the 2019s and 2021s,” he said. “There are no flows to speak of.”

Ecopetrol weakens

Colombia-based Ecopetrol SA saw its new issue of 5 3/8% notes due 2026 that priced at 99.328 to yield 5.457%, or Treasuries plus 305 bps, weaken in trading on Friday.

“Markedly weaker in what is shaping up as an overall risk-off session in Latin America credit here, into the weekend,” a New York trader said.

The notes were talked at a spread in the 320-bps area.

Credit Suisse and HSBC were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general corporate purposes.

Armenian protests take toll

In other news, the protests that have been taking place in Armenia’s capital for the last week are starting to “impact its sovereign eurobonds,” according to a report from Schildershoven Finance BV.

“We still believe they will not escalate,” the report said, “but Ukraine’s example has led investors to remain very cautious.”

Baidu oversubscribed

The final book for China-based Baidu Inc.’s $1.25 billion two-tranche issue of notes due in five and 10 years was about $7.9 billion, a market source said.

The $750 million 3% notes due 2020 that priced at 99.866 to yield 3.029%, or Treasuries plus 135 bps, drew a final book of $4 billion from 250 accounts.

About 51% of the orders came from the United States, 34% from Asia and 15% from Europe.

The $500 million 4 1/8% notes due 2025 that priced at 99.830 to yield 4.146%, or 175 bps over Treasuries, drew a final book of $3.9 billion from 260 accounts.

About 45% of the orders came from Asia, 37% from the United States and 18% from Europe, with 61% from fund managers, 21% from insurers and agencies, 12% from banks, 3% from others and 3% from private banks.

Goldman Sachs and JPMorgan Securities were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general corporate purposes.

© 2015 Prospect News.
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