Adani issues new notes; Turkey in focus; Lat-Am widens, lowers; Bulgarian Energy deal ahead

By Christine Van Dusen

Atlanta, July 26 – India’s Adani Transmission Ltd. sold notes on Tuesday as Turkey remained on the market’s mind, with the sovereign calling for the United States to extradite a cleric who allegedly engineered the recent, failed coup attempt.

“In Turkey, recent events signal that the crackdown is far from over, as the country has entered a three-month state of emergency,” a London-based analyst said.

But credit from Turkey was firm at the open, with five-year credit default swaps spreads narrowing 2 basis points to 269 bps. Cash prices started the session flat but supported by a rally in U.S. Treasuries, he said.

This came as the sovereign released its third-quarter inflation report, in which Turkey maintained its 7½% forecast for inflation in 2016 and 6% for 2017, a trader said.

“But CBT governor Murat Cetinkaya alerted markets to a sharply higher inflation print for July,” he said. “We forecast core inflation to moderate, but remain in the vicinity of 8%, which means that room for monetary easing is limited.”

Still, the central bank is expected to continue to ease policy in an effort to support the economy, he said.

“This is especially likely, as loan growth has been declining steadily and this will become a focus when the economy begins to slow down,” he said.

Overall, flows were balance for Turkish bonds on Tuesday and died down a bit as the session wore on, a trader said.

Asian buyers picked up long-dated sovereign bonds, with the 2043s remaining popular.

“The front end of the curve has yet to perform,” he said.

Bank paper from Turkey was popular, with spreads compressing to previous tights versus the sovereign, he said.

Lat-Am suffers

Looking to Latin America, bonds traded poorly on Tuesday but closed off their widest and lowest levels of the day, a New York-based trader said.

Five-year credit default swaps spreads for Brazil closed at 296 bps from 294 bps after trading as wide as 300 bps, and Mexico moved to 149 bps from 144 bps after trading at 151 bps earlier in the day.

“Cash prices continue to be very heavy, specifically for long-end bonds, as recent flattening is unwound and the external dollar curves steepens,” he said. “Lat-Am high yield is not spared today, as both Venezuela and Argentina are lower.”

PDVSA, Venezuela, Argentina dip

Venezuela-based PDVSA’s 2017s closed at 74.50 from 75.25, while Venezuela’s 2027 finished at 47.50 from 48.75, the trader said.

Argentina’s Bonar 2024s ended the day at 116.30 from 116.80, and the 2026s closed at 107.75 from 108.50, he said.

“Flows today were dominated by better sellers, for the most part, with some buyers popping up later in the session,” he said. “Markets are clearly on edge for the slew of central bank-speak this week.”

Ecuador notes trade

The new issue of notes from Ecuador – $1 billion 10¾% notes due 2022 that priced Monday at par to yield 10¾% – traded at 99.90 bid, 100.60 offered on Tuesday, a trader said.

Citigroup was the bookrunner for the Rule 144A and Regulation S deal.

The final book was about $2 billion.

Low liquidity for Ukraine

Looking to Ukraine, liquidity has been low so far this week, with light supply on the front end of the sovereign curve, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

Quasi-sovereigns have been mostly unchanged, he said.

Bulgarian Energy plans

Bulgarian Energy Holding EAD is planning to issue euro-denominated notes due in five years (Ba2), according to a company announcement.

JPMorgan is the bookrunner for the Regulation S deal.

The issuer is based in Sofia, Bulgaria.

Issuance from Adani

In its new deal, Adani Transmission priced Rs. 5 billion of 9.1% senior secured notes due 2021 payable in dollars, according to a letter written to BSE Ltd. and National Stock Exchange of India Ltd.

Credit Suisse AG, Singapore Branch will purchase the masala bonds and then sell them through a private placement offer to investors outside India and the United States.

The company also announced plans to price 10-year dollar-denominated fixed-rate senior secured notes.

Adani Transmission is an electric power transmission company based in Ahmedabad, India.

Angela McDaniels contributed to this article.

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