New Arab Petroleum bond trades just over par; Abu Dhabi Crude Oil Pipeline, Arauco price

By Rebecca Melvin

New York, Oct. 26 – Arab Petroleum Investments Corp.’s new 3.141% Islamic bond was seen trading slightly over par at 100.13 bid, 100.18 offered on Thursday after the multilateral development bank priced $500 million of the five-year notes under Regulation S, according to a market source.

Investors in the region were also watching Abu Dhabi Crude Oil Pipeline LLC, wholly owned by Abu Dhabi National Oil Co., which launched and priced $3.04 billion of senior notes in 12-year and 30-year tranches.

The Abu Dhabi pipeline notes priced late in the London session and were not heard in trade. But the issue was multiple times oversubscribed, with order books topping $11 billion, skewed to the 30-year notes, a market source said.

In Latin America, Celulosa Arauco y Constitucion SA, a Chilean wood pulp company, priced $900 million of notes in 10-year and 30-year tranches. The notes were reoffered at slightly under par to yield 4.063% and 5.52%, respectively.

Argentine commercial bank Banco Hipotecario SA mandated JPMorgan, Credit Suisse and BCP Securities to begin three days of investor meetings for a peso-denominated international offering, starting Thursday, according to a market source.

Also in the pipeline for Latin America are note deals for Banco Nacional de Costa Rica and Banco de Credito del Peru.

Central bank in focus

In market news on Thursday, the European Central Bank said it is going to continue its quantitative easing program of purchasing euro zone government bonds into 2018, but at reduced levels, a shift in policy that signals a move toward higher interest rates.

The bank plans to continue buying bonds through September 2018 but will cut the level of monthly purchases in half to €30 billion starting in January.

ECB president Mario Draghi said in a press conference that QE is not being tapered but downsized. Tapering would suggest winding down QE to zero. It is the third time that the bank has extended the program.

Investors were watching the conclusion of the ECB policy meeting for clues regarding its commitment regarding keeping rates low.

Elsewhere, Kenya credit was in focus as Kenyans were going to return to the polls for a rerun of the presidential election that was contested in August. The vote was being held even though the main opposition alliance decided to boycott. Thus the turnout was expected to be low and not much was expected to be decided by the outcome.

South Africa and Turkey continued to trade softer as the currencies for those countries depreciated by 3.7% and 2.6%, respectively, since last Friday, versus the U.S. dollar. The move resulted in South African sovereign credit widening by 10 bps to 12 bps on Thursday. Meanwhile Turkey’s sovereign credit was trading about 5 bps to 10 bps wider on the day, and Turkish banks were about 15 bps to 25 bps wider on the day on average.

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