Banco do Brasil, IDBI Bank print notes; Fed remarks lead to risk aversion; Maoye cancels deal

By Christine Van Dusen

Atlanta, March 19 - Banco do Brasil SA and India's IDBI Bank Ltd. printed notes on a fairly active day as tensions in Crimea increased and risk aversion set in following the Federal Reserve's decision to end bond-buying this fall and raise rates about six months after.

The tension in Crimea escalated following the death of a Ukrainian soldier and the Ukraine government's decision to use live ammunition in self-defense. In response, bonds from Russia continued the rally seen on Tuesday, a London-based analyst said.

"This was helped by comments from [Russian President] Putin, that he did not wish to intervene in Eastern Ukraine," she said. "We saw particular demand for quasi-sovereigns. This morning we are seeing a continuation of the bounce, with buyers in the likes of Lukoil, Severstal, Vimpelcom, Sibur Holdings and Eurochem."

Looking to Turkey, bonds weren't battered, despite news of a recording of anti-Islam comments from Ministers and a Parliamentary session to hear corruption allegations against four former government ministers, she said.

"Moody's review of 10 banks has also not helped matters," she said. "But overall, paper is generally better-bid this morning."

Investors also were keeping an eye on the Federal Open Market Committee after Chair Janet Yellen said the central bank would taper its monthly bond-buying program by about $10 billion.

Meanwhile, bonds from the Middle East were becoming nearly "impossible to short and source," a trader said. "This market is crying out for supply. But until that happens, they trade very well."

Kuwait Projects Co. (Kipco), for one, saw its 2019s trade at 125½ bid, 126 offered on Wednesday after trading at 121 in previous weeks, he said.

"Granted, some of the larger industrial-sized buyers have been chasing the Kipco 2019s, but it's still a very impressive effort," he said.

Africa in focus

Trading among bonds from Africa was a "mixed bag" on Wednesday, a trader said.

Bonds from Zambia closed 32 basis points wider at 821/2.

"In contrast, Angola and Gabon felt supported, closing 6 bps tighter and 15 bps tighter on the week," he said. "Morocco continues to hold well."

Egypt was on pause, he said, following recent local demand for the sovereign's 2020 dollar notes.

"Nearly printed at 103 yesterday," he said.

Bonds from Senegal were 35 bps tighter on the week at 113½ on the bid side, he said.

"In South Africa, it's all well-supported," he said. "The sovereign curve is 5 bps to 10 bps tighter and corporates are popular."

Lat-Am widens

From Latin America, corporate bonds ended Wednesday's session wider and lower after tightening during the morning, a New York-based trader said.

Risk aversion took hold, pushing bonds from Venezuela's PDVSA down a ½ point to a point, he said.

Bonds from Argentina outperformed and ended the day nearly unchanged, he said.

"We saw better sellers on the day," he said.

Hungary trades up

In other trading on Wednesday, the recent issue of notes from Hungary - a combined $3 billion of five- and 10-year notes - traded well, a trader said.

The sovereign sold $2 billion 5 3/8% 10-year notes at 98.663 to yield 5.551%, or Treasuries plus 287.5 bps.

The sovereign also sold $1 billion of 4% five-year notes at 99.356 to yield 4.144%, or 260 bps over Treasuries.

"Both tranches are trading up, 30 cents to 50 cents above reoffer," she said.

BNP Paribas, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities plc were the bookrunners for both tranches.

The proceeds will be used for general funding purposes.

Brazil bank prices tap

In its new deal, Banco do Brasil priced a €300 million tap of its 3¾% notes due 2018 at 102.304 to yield 3.169%, a market source said.

BB Securities, Bradesco BBI, Deutsche Bank, HSBC, JPMorgan and Santander were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

The original €700 million 3¾% five-year notes priced in July at 99.442 to yield 3 7/8%, or mid-swaps plus 283.9 bps.

Banco do Brasil is a lender based in Brasilia, Brazil.

IDBI does deal

Also on Wednesday, India's IDBI Bank priced $300 million 5% notes due 2019 at 99.71 to yield 5.061%, or Treasuries plus 350 bps, a market source said.

BNP Paribas, Citigroup, Credit Agricole, HSBC and RBS were the bookrunners for the Regulation S deal.

IDBI Bank is a public sector bank based in Mumbai.

Maoye postpones

In other news, China's Maoye International Holdings Ltd. has postponed its planned offering of renminbi-denominated and benchmark-sized notes due in three years, a market source said.

Talk had been set in the 7¼% area.

Citigroup and Deutsche Bank were the bookrunners for the Regulation S deal.

The proceeds were to be used to refinance existing debt and for general corporate purposes.

Maoye is a department store based in Shenzhen, China.

© 2015 Prospect News.
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