Petrobras sees buyers on possible recapitalization; TAQA struggles; Korean Air gets orders

By Christine Van Dusen

Atlanta, Nov. 20 – Brazil was the focus of attention on an otherwise mostly quiet, illiquid Friday, as the government considered several ways of recapitalizing debt-saddled Petroleo Brasileiro SA.

A recapitalization would affect not only sovereign debt but also public sector debt, a trader said.

In response, buyers were out “in droves” for bonds from Petrobras on Friday, a New York-based trader said.

The curve was a little bit stronger after “a blistering move yesterday afternoon,” he said.

For other emerging markets debt, the tone was “fairly bullish,” a London-based trader said. “But don’t forget the yuan devalue and pick-up in U.S. inflation as tail risks to EM credit.”

In other trading, Turkey’s bonds opened firmly on Friday, “as expectations build on a market-friendly cabinet,” a trader said.

From the Middle East, Abu Dhabi National Energy Co. (TAQA) struggled, he said.

“I’ve been wary of this credit for some time, and it’s underperformed Abu Dhabi peers by some margin since the summer,” he said. “The 2021 from TAQA is now at a trading level not seen since Easter 2012.”

In other news, the final book for the new issue of notes from Korean Air Lines Co. Ltd. – $300 million 2˝% notes due 2045 that priced Thursday at 99.963 to yield 2.513%, or Treasuries plus 130 bps – was about $900 million from 47 accounts, a market source said.

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