Pampa Energia, Raizen Energia, Equate Petrochemical ready deals; Turkey underperforms

By Christine Van Dusen

Atlanta, Jan. 6 – Argentina’s Pampa Energia SA, Brazil-based Raizen Energia SA and Kuwait’s Equate Petrochemical Co. KSCC readied new issues on a Friday that saw most emerging markets names – other than Turkey – perform well in trading.

“We are off to a solid start into 2017, with EM assets having seen strong demand throughout the first week,” a London-based analyst said. “In rates, we saw somewhat of a reversal in the reflation trade put on after the Trump win, with markets also turning a blind eye on the more hawkish FOMC minutes.”

Indeed, 10-year Treasuries were seen trading almost 30 basis points tighter, versus the highs seen on Dec. 15, he said.

“With investors returning to EM credit in a search for yield, we saw further spread compression,” he said. “With spreads still fairly tight, we are seeing high-yielding Asian, Sub-Saharan African and Latin American assets as the biggest gainers this week.”

There was a strong bid almost across all emerging markets geographies and sectors, but it remains to be seen whether the bid can continue, he said.

“We think that the positive mood could swap over into next week,” he said.

But rates and sentiment are likely to remain volatile, he said.

“With Trump’s inauguration nearing, the focus will inevitably shift back to his policies,” he said.

In trading, bonds from Turkey have underperformed so far this year, following terrorist attacks and political conflicts.

“On the macro front, the inflation picture remains weak amid higher energy prices and food prices, in addition to a weaker lira and one-offs in December,” he said.

Turkey’s weakness was driven by “negative news flow, weaker economic prints and highly volatile moves in the lira,” a market source said.

Pampa Energia sets roadshow

In deal-related news, Argentina’s Pampa Energia will set out on Jan. 10 for a roadshow to market a dollar-denominated and benchmark-sized offering of notes, a market source said.

Citigroup and Deutsche Bank are joint bookrunners. Credit Agricole and Santander are co-managers for the deal.

The roadshow will end on Jan. 16.

Pampa Energia is an energy company based in Buenos Aires.

Raizen plans marketing trip

Brazil-based Raizen Energia will set out on Jan. 9 for a roadshow to market a possible issue of dollar-denominated notes, a market source said.

BofA Merrill Lynch, Bradesco, Citigroup, JPMorgan and Santander are the bookrunners for the deal.

The roadshow will be held in Boston, London and New York and end on Jan. 11.

The energy company is based in Sao Paulo.

“The [EM] pipeline is slowly filling up, as markets are craving for supply,” another market source said.

Equate to issue sukuk

Kuwait’s Equate Petrochemical is looking to print a dollar-denominated issue of Islamic bonds sometime during the early part of this year, a market source said.

Bookrunners for the deal have not yet been selected.

Other details were not immediately available on Friday.

In October the issuer priced $2.25 billion of senior notes in two tranches, with $1 billion 3% notes due 2022 pricing at a 195 basis points over mid-swaps. A $1.25 billion tranche of 4¼% notes due 2026 priced at mid-swaps plus 270 bps.

Equate is 85% owned by Petrochemical Industries Co. and Dow Chemical and produces essential chemical compounds as the largest petrochemical complex in Kuwait.

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