Deal from Guangxi Communications; eyes on oil, data, election; Kuveyt Turk sees ‘decent’ flow

By Christine Van Dusen

Atlanta, Oct. 31 – China’s Guangxi Communications Investment Group Corp. Ltd. sold notes on a Monday that saw emerging markets investors watching oil prices and awaiting economic data releases from the United States as election day nears.

“We’re heading into an enormously busy week, dominated once more by developed market central bank meetings and macro data,” a London-based analyst said. “While the key central banks are set to leave their policies unchanged, the focus remains on the further trajectory.”

Oil also remained in focus on Monday, as prices dropped about 3% after little progress was made during the weekend’s meeting of oil producers. Cartel officials approved a long-term strategy for cutting production, but market-watchers were skeptical.

“With the OPEC meetings over the weekend not yielding any progress, the earnings season ongoing and political noise in the U.S. election campaign, markets are likely to trade on a cautious note for the week,” the analyst said. “Brent and WTI crude have continued their falls below $50 per barrel on Friday but stabilized over the weekend. News from the weekend was certainly not helpful, as infighting within OPEC seemed to have prevented the bloc from getting closer to output freezes and cuts.”

Overall, trading was quiet ahead of Tuesday’s All Saints Day holiday.

Of the activity that did take place, the $17.5 billion megadeal from Saudi Arabia accounted for most of it, a trader said.

The sovereign recently priced $5.5 billion 2 3/8% notes due in 2021 at 99.007 to yield 2.588%, or Treasuries plus 135 basis points.

The $5.5 billion 3¼% notes due in 2026 priced at 98.679 to yield 3.407%, or Treasuries plus 165 bps. And the $6.5 billion 4½% notes due in 2046 priced at 98.015 to yield 4.623%, or Treasuries plus 210 bps.

Turkey better offered

Turkey, meanwhile, was better-offered “as cash was raised to settle the new bank supply,” a trader said. “The 2018 sukuk was looking cheap.”

Among corporate bonds from Turkey, only Kuveyt Turk Katilim Bankasi AS was seeing much action. The Istanbul-based financial company last week priced $500 million 5.136% notes due 2021 at par to yield 5.136%, or mid-swaps plus 385 bps.

The Regulation S notes were initially talked at a spread in the low-mid swaps plus 400 bps area.

“Kuveyt Turk was the only one with any decent flow,” he said.

Azerbaijan was “back on the radar with weakening oil,” he said.

In other trading, bonds from South Africa were firm, another trader said.

Guangxi Communications notes

In its new deal, China’s Guangxi Communications Investment Group sold $300 million fixed-rate notes at 99.806, according to a notice that appeared on Monday.

Societe Generale SA was the stabilization manager.

Other details were not immediately available on Monday.

The issuer is a Nanning, China, investment company that invests in transportation infrastructure, energy, finance and resource development.

Banco de Bogota sells bonds

Last week, Colombia’s Banco de Bogota SA priced a $500 million tap of its 6¼% notes due May 12, 2026 at a yield of 5.95%, according to a company announcement.

The Rule 144A and Regulation S notes will be an addition to the bank’s existing $600 million 6¼% subordinated notes due 2026 issued in May.

The bank said it will issue the new notes to substitute in whole or in part an outstanding promissory note originally issued to Grupo Aval Ltd. on Dec. 21, 2015.

Other details were not immediately available on Monday.

The commercial bank is based in Bogota, Colombia.

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