Turkey improves again; EM debt spreads mostly wider; Vivo Energy, Enel Chile on tap

By Rebecca Melvin

New York, May 30 – Turkey continued to improve on Wednesday as the broader markets regained their footing following a rout on Tuesday over fears about growing political risk in Italy and the future of the euro zone. Emerging markets debt was also mostly steady, but many issues were wider on spread, market sources said.

Turkey’s bonds fell sharply two weeks ago amid a plunge in the lira. On Wednesday the bonds continued their recovery, albeit by a lesser amount, following word on Monday that Turkey’s central bank moved to increase rates and simplify monetary policy to protect the lira.

Turkey’s 6 1/8% notes due 2028 were up 0.143 point to 96.49 at late morning. On Tuesday the bond gained 1.4 points to 96.285.

The lira, which had sunk to 4.9 to the dollar last week, was 4.48 in the early going on Wednesday and 4.46 to the dollar last.

After cash prices adjusted to a swing in rates on Tuesday, they were steady on Wednesday with spreads mixed to wider. Yields were steady to higher on Wednesday. On Wednesday the yield on the benchmark U.S. Treasury 10-year note was up to 2.834%, after dropping to as low as 2.78% on Wednesday.

Abu Dhabi Commercial Bank PJSC was one of those names for which spreads were mixed. The bank’s shorter-dated 2¾% notes due 2019, 3% notes due 2019 and 2 5/8% notes due 2020 were wider, with the 2 5/8% notes wider by as much as 22 bps. But the 4½% notes due 2023 and the 4% notes due 2023 were tighter.

Meanwhile, Abu Dhabi Islamic Bank’s 6 3/8% notes due 2166 were wider by 15 bps, at a cash price of 100.00 bid, 100.75 offered. Qatar’s Ahli Bank QSC’s sister issues, a 3 3/8% note due 2021 and 3½% notes due 2022, were wider by 5 bps to 6 bps, at 97.50 bid 98.25 offered, and 95.50 bid, 96.25 offered, respectively.

But Dubai’s Damac Real Estate Development Ltd. saw its bonds, which have widened out by better than 100 bps in the past month, tighten by a good margin on Wednesday. The Damac 6½% notes due 2022, which priced last year, were 95 bid, 96 offered and tighter by 27 bps.

Egypt and Lebanon were pretty much all wider and underperformed the overall market. But the bonds of Qatar’s Oordeoo QSC, a Doha-based telecommunications company, were all tighter and hadn’t blown out in the last month like some issues.

Africa-focused Vivo Energy Investments BV announced an offering of five-year notes that are non-callable for two years or seven-year notes that are non-callable for three years.

JPMorgan and Societe Generale are the bookrunners for the Rule 144A and Regulation S deal.

Vivo Energy is a Shell licensee, operating 1,800 service stations in 15 countries and is using proceeds for repayment of borrowings, expenses and toward its proposed acquisition of Engen International Holdings (Mauritius) Ltd.

Also announcing a deal was Enel Chile SA, which is planning dollar-denominated notes via joint bookrunning managers BBVA, Citigroup, JPMorgan, Morgan Stanley, Santander and Scotiabank.

The notes will be registered with the Securities and Exchange Commission.

Enel Chile is power generation and distribution company that is 61.9% owned by Italy’s Enel SpA.

Latin America has been notably quiet since EM took it on the chin with the strengthening dollar beginning in April. Some low-beta credits continue to outperform and are wider in spread only to reflect the moves in rates, a New York-based market source said on Wednesday.

There was some flight to quality on Tuesday, the source said, but it’s “still too early to say it’s here to stay.”

© 2015 Prospect News.
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