Tighter spreads for many EM names; oil prices, rates sell-off help tone; roadshows ahead

By Christine Van Dusen

Atlanta, Oct. 7 – Emerging markets assets tightened on a mostly calm Friday amid support from oil prices and solid inflows.

That, plus the sell-off in rates, were “combining to tighter spreads, for the most part,” a London-based trader said. “Active week, with balanced interests overall.”

Investors are keeping an eye on monetary policy, a London-based analyst said.

“The next FOMC policy decision will take place on Nov. 2, but at this point markets see too much of an uncertainty from the Presidential elections only a week later,” he said. “Instead, Fed futures are currently pricing in a probability of 64% in favor a rate hike in December.”

Turkey’s five-year credit default swaps spreads tightened by about 12 basis points into the end of the week while banks and corporates saw their bonds narrow by between 20 bps and 30 bps, he said.

The sovereign has “regained some of the luster, following Moody’s downgrade,” a trader said.

Said the analyst, “Much of this is driven also by the upward momentum in oil prices after OPEC members agreed to curtail output in order to stabilize market prices. A follow-up informal meeting will now take place on the sidelines of the World Energy Congress in Istanbul.”

Looking ahead, “oil prices could see renewed upward pressures if it turns out that Russia will join OPEC in cutting oil production,” he said. “Doubts remain as details will only be finalized at OPEC’s ordinary meeting in end-November.”

In trading by Friday, Venezuela, Pakistan, Mongolia, Ecuador and Ghana were outperformers, a trader said.

Qatar active, IPIC sees demand

Looking at the Middle East, bonds traded lower on a price basis, but spreads were doing “fairly well” on Friday, another trader said. “The Qatar sovereign curve has been active, with again the more-recent 2021, 2026 and 2046 being the more liquid ones, though a chunk of 2020s were floating around.”

Qatar National Bank’s 2021s closed 10 bps tighter on the week, he said.

“Long-end paper still at the mercy of the lifers, with on-going demand for International Petroleum Investment Co., Abu Dhabi National Energy Co. and Qatar at the expense of Saudi Electricity Co.”

Meanwhile, the market awaits news of Saudi Arabia’s plans for issuance, he said.

Promsvyazbank sets roadshow

In deal-related news, Russia’s Promsvyazbank OJSC will set out on Oct. 10 for a roadshow to market a dollar-denominated issue of notes, a market source said.

The notes are likely to carry a tenor of three or 3½ years.

HSBC, ING, JPMorgan, Renaissance Capital and Promsvyazbank are the bookrunners for the Regulation S deal.

The roadshow will be held in London and Switzerland.

Promsvyazbank is a Moscow-based lender.

Roadshow for Malaysia’s EXIM

Also on Friday, Export-Import Bank of Malaysia Bhd. (EXIM Bank) announced that it will depart on Oct. 10 for a roadshow to market a dollar-denominated issue of notes (expected ratings: A3//A-), a market source said.

CIMB, Maybank, HSBC and Nomura are the bookrunners for the Regulation S deal.

The lender is based in Kuala Lumpur.

Bahrain draws orders

The combined final book for Bahrain’s recent $2 billion issue of notes due in 2024 and 2028 was more than $7 billion, a market source said.

The $1 billion 5.624% Islamic bonds due Feb. 12, 2024 priced at par to yield 5.624%, or mid-swaps plus 424 bps, following talk in the 6% area. About 56% of the orders came from the Middle East. About 45% went to banks.

The $1 billion 7% conventional bond due Oct. 12, 2028 priced at par to yield 7%, or mid-swaps plus 539 bps. Talk was set in the 7¼% area. About 39% of the orders came from Europe, and about fund managers picked up 76%.

Bank ABC, BNP Paribas, Credit Suisse, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general governmental purposes.

Final book from Argentina

The new notes from Argentina – a €2.5 billion two-tranche issue due 2022 and 2027 – attracted about $6.25 billion of orders, a market source said.

The €1.25 billion 3 7/8% notes due Jan. 15, 2022 priced at 99.432 to yield 4%, following talk in the 4 3/8% area. About 33% of the orders went to the United Kingdom, and asset managers picked up 94%/

The €1.25 billion 5% notes due Jan. 15, 2027 priced at 99.045 to yield 5 1/8%, following talk in the 5½% area. About 37% of the orders went to the UK, and asset managers picked up 88%.

BBVA, BNP Paribas and Credit Suisse were the bookrunners for the Regulation S deal.

The proceeds will be used for general governmental purposes.

© 2015 Prospect News.
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