Hunt Oil prices, trades well; EM tighter as oil prices drop; Empresas CMPC deal quiet

By Rebecca Melvin

New York, May 25 – Hunt Oil Co. of Peru LLC’s newly priced 6 3/8% notes traded well early Friday after the San Isidro, Peru-based oil and gas company priced $600 million of the 10-year notes tight compared to initial talk, according to market sources.

The Hunt Oil notes came to the market with a 6.6% yield, which was considered cheap by market sources. It traded up from its reoffer of 99.235, sources said. But there was no news on pricing of Empresas CMPC SA, the Santiago, Chile-based pulp and paper company, which has talked an offering of dollar-denominated intermediate notes with fixed-income investors.

Successful pricing and trading of the Hunt Oil was not overly encouraging for the primary market as it was not seen as paving the way for successful pricing of the CMPC deal.

“Any deal that prices in this market is encouraging,” but the Hunt deal seems to indicate “everything can get done at a price and if it has an attractive yield,” a New York based market source said.

Recent strengthening dollar and higher Treasury rates have taken a toll on emerging markets debt, and the Latin America region has seen new issuance sharply curtailed compared to the first quarter, when record new issue volume was tallied. Hunt Oil was the only paper that priced in the Latin America region this week and last week; Brazil’s Unigel Luxembourg SA’s $200 million of 10½% five-year notes was the only dollar-denominated paper in the space. (However, Petroleos Mexicanos SAB de CV did price €3.15 billion in four tranches from European syndicate desks.) And the week before there was no paper in the Latin America region.

In the secondary market on Friday there was a surprising uptick in emerging market debt, which was trading well heading into the long holiday weekend.

“There were buyers across the board; other than Turkish banks, everything is tighter [on spread],” according to a London-based trader.

The Turkey sovereign curve was 10 basis points to 15 bps tighter on the day, while the banks were unchanged to 5 bps wider, the trader said. And there was demand for Africa and Middle East credits despite oil prices moving lower.

Oil prices fell on Friday as Saudi Arabia and Russia energy officials met to discuss the conclusion of orchestrated production cuts that have helped boost crude prices to their highest levels since 2014.

On Friday, the Brent crude benchmark fell 3% to $76.44 a barrel. It also lost about 2.7% for the week after hitting its highest level in four years last week at $80.50 per barrel.

West Texas Intermediate crude fell $2.83, or 4%, on Friday to $67.88 a barrel. The benchmark is down 5% for the week.

Russia and Saudi energy ministers met in St. Petersburg to discuss plans related to the global oil supply pact ahead of a meeting of the Organization for Petroleum Exporting Countries in Vienna next month. The current agreement has been in place for 17 months and it has effectively reduced global crude inventories, as intended, and boosted prices. Declining Venezuelan crude oil production and the expectation of renewed sanctions on Iran by the Trump Administration has further supported prices in recent weeks.

As for the stronger emerging market debt market, a trader said that the explanation was “supply and demand” and the fact that the market “has been beaten up so much.”

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