Russia bonds improve on lessened violence in Ukraine; Serbia, Croatia, Nigeria outperform

By Christine Van Dusen

Atlanta, Feb. 27 – Russian bonds, which saw weakness early in the week as fighting in Eastern Ukraine appeared to continue and the United States weighed further sanctions, improved by Friday on news that the violence had subsided.

“We have seen reports of heavy weapons being pulled back from the front line,” a London-based analyst said. “Those headlines have seen Russia rally, with credit default swaps circa 30 basis points tighter from Wednesday.”

But the fact that the United States could end up sanctioning Russian banks, their bonds moved 44 bps wider on the week, with Sberbank’s 2024s moving out by 92 bps.

“Although certain euro bonds performed better,” he said. “Corporates were 28 bps wider, on average.”

From Turkey, the Central Bank cut the benchmark rate during the week by an amount that didn’t satisfy the government, and that put pressure on the lira and pushed credit default swaps out 4 bps on Friday.

“Clearly that will raise concerns about external debt liabilities within the country,” he said.

And Serbia and Croatia bonds put in a strong week on the back of the European Central Bank’s quantitative easing program, which pushed Serbia’s 2020s 55 bps tighter and Croatia’s 2020’s 29 bps tighter by Friday, the analyst said.

Looking to the Middle East, most banks were about 1 bp wider on average by Friday, a trader said.

“The Dubai Islamic Bank old perpetual underperformed this week, but that follows very strong performance recently,” he said. “Corporates are 1 bp tighter, on average.”

RAKbank widens

In other trading from the Middle East, Dubai-based National Bank of Ras Al Khaimah’s (RAKbank) tap of its 3¼% notes due in five years widened on the week after pricing at 100.875, a trader said.

National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The original $500 million 3¼% five-year notes priced in June at 99.275 to yield mid-swaps plus 160 bps.

Nigeria, Ivory Coast trade

From Africa, Nigeria was a standout, with its sovereign paper narrowing about 73 bps on the week, a trader said.

And the new issue of notes due 2027 from Ivory Coast traded up on Friday roughly a point from reoffer, he said.

BNP Paribas, Citigroup and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S notes, which will have three equal redemption payments in 2026, 2027 and 2028.

Asian corporates in focus

High-grade corporate bonds from Asia finished their Friday session unchanged to 3 bps tighter, a London-based trader said.

“Continue to see profit-taking in Tencent Holdings’ 2025, with bonds down,” he said. “Korea 10-year senior financials are a touch tighter.”

Among high-yield Asian names, property companies from China closed unchanged to ¼ point higher, he said.

Philippines, Indonesia lower

Asian sovereign curves opened lower on Friday, with the long end for the Philippines ticking down ½ point to ¾ point while Indonesia’s long end dipped a ½ point before buyers emerged and pushed its notes up ¼ point, the trader said.

“However, we dipped again as Treasury yields rose, and the Philippines long end closed ¾ point to 1 point lower,” he said. “Indonesia’s long end was ¼-point to ½-point lower.”

Yapi Kredi plans notes

Turkey’s Yapi ve Kredi Bankasi AS (Yapi Kredi) is looking to issue up to $6 billion of notes, a market source said.

The notes will likely come to the market in several issuances.

Other details were not immediately available on Friday.

Yapi Kredi is an Istanbul-based lender.

Country Garden draws orders

The final book was more than $4.8 billion for the new issue of notes from China-based real estate developer Country Garden Holdings Co., a market source said.

The notes $900 million 7½% notes due 2020 priced Thursday at par via JPMorgan, Goldman Sachs, HSBC, Deutsche Bank, CLSA and Wing Lung Bank in a Regulation S deal.

The coupon was well below the initial guidance of 7 7/8%, according to a report from Schildershoven Finance BV. “In our view, the new Country Garden 2020 was priced roughly fair at 7½%. If there’s any premium, it’s rather small – around 10 bps to 20 bps.”

The proceeds will be used to refinance the company’s $900 million 11 1/8% senior notes due 2018 and for other debt.

“The bonds opened above reoffer and traded in the range of 100 1/8 to 100 3/8 with good retail demand,” a London trader said on Friday. “We closed at 100¼ bid, 100½ offered.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.