KrisEnergy prices; new violence keeps Russia, Ukraine in focus; China Construction eyed

By Christine Van Dusen

Atlanta, Aug. 18 – Indonesia’s KrisEnergy sold notes on Monday as risk sentiment at first improved – after leaders from Russia and Ukraine met to discuss a ceasefire – then gave way to caution as new violence was reported.

A bus convoy from Ukraine was hit by rocket fire on Monday, according to news reports, and numerous people were killed. Ukrainian officials blamed pro-Russia rebels, who said they were not involved and that perhaps an attack never occurred.

Market experts urged caution, with Commerzbank strategists suggesting underweight positions in the two sovereigns while the negotiations continue.

“The positive, so far, has been Russia’s statement that it will ensure no illegal border crossing from its own side,” said analyst Tatha Ghose. “This reassurance by the government is crucial and could bring temporary reprieve.”

In the morning, Russian sovereign bonds improved just slightly, with the 3½% 2019 notes that priced at 99.195 trading Monday at 99.5 bid, par offered.

The sovereign’s 4 7/8% notes due 2023 that priced at 98.162 were spotted at 100.25 bid, 100.75 offered.

And Russia’s 3 5/8% notes due in 2020 that priced at 99.533 climbed to 101.25 bid, 101.75 offered.

The corporate side didn’t fare as well, with Russia-based Vnesheconombank’s (VEB) 4.224% notes due in 2018 that priced at par quoted on Monday at 94 bid, 95 offered.

The Moscow-based lender’s 5.942% notes due in 2023 that priced at par fell to 92.25 bid, 93.25 offered.

And Russia’s JSC VTB Bank saw its 5% Swiss franc-denominated notes due in 2015 trade on Monday at 98.62 bid, 100.12 offered after pricing at par.

Perpetuals, Abu Dhabi eyed

Spreads for bonds from the Middle East managed to put in a “good session” on Monday, a London-based trader said.

Perpetual notes from the region and paper from Abu Dhabi saw good demand while Qatar’s notes were firm, he said.

“It feels like there’s demand around, still, at the long end,” he said. “The United Kingdom long weekend is coming up and the United States long weekend after that, so expect liquidity to be thin until the first of September.”

LatAm corporates firm

Looking to Latin America, the session for corporates was slow at the start and then picked up in activity throughout the session, a New York-based trader said.

Bonds remained mostly firm, with notes from Brazil’s Petroleo Brasileiro SA (Petrobras) among the few to tighten on Monday, he said.

Mexico’s Cemex SAB de CV saw limited volumes, and paper was difficult to find, he said.

Volumes light for sovereigns

The risk-on trade was alive and well on Monday for Latin American sovereign bonds, another New York-based trader said.

Volumes remained light and activity was skewed to the buyside, he said.

Brazil was among the names to get a lift, as election results appeared to be too close to call. And bonds from Venezuela ended Monday up between 0.25 and 0.50.

The latter sovereign’s 2027s were seen at 82.65, he said.

KrisEnergy does deal

Indonesia’s KrisEnergy priced S$200 million four-year notes at par to yield 5¾%, a market source said.

HSBC and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The proceeds will be used for general corporate purposes and for near-term capital expenditures associated with the company’s development assets.

The issuer is a Jakarta-based oil and gas company.

CCB draws orders

China Construction Bank’s new issue of $750 million 4¼% notes due 2024 that priced at 99.577 drew a final order book of more than $3.5 billion from 175 orders, a market source said.

The notes were issued at a spread of 275 basis points over Treasuries via CCB International, Citigroup, HSBC, ANZ, BofA Merrill Lynch, Deutsche Bank and UBS.

About 86% of the orders for the Regulation S deal came from Asia and 14% from Europe.

Insurers accounted for 34%, fund managers 33%, private banks 24% and banks 9%.

© 2015 Prospect News.
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