Yapi Kredi prices on strong backdrop; Turkey keeps rates unchanged; Asia sees debut issues

By Colin Hanner

Chicago, June 15 – The emerging market primary space continued to have a “steady pace of supply coming to market,” a market source said, on the back of a Federal Reserve hike on Wednesday.

And, though oil prices have been the culprit of movement in global markets as of late, “there has been no spillover on [emerging market] credit,” a market source said.

“[Emerging markets] certainly continues to benefit from the supportive market backdrop,” another source said, citing Yapi ve Kredi Bankasi AS’ (Yapi Kredi) return to the primary market just a week after selling a lira-denominated issue.

The Istanbul-based lender sold $500 million seven-year notes (Ba1//BBB-) at par to yield 5.85% late Wednesday, a market source said.

Price talk on the Rule 144A and Regulation S offering tightened to 5.85% from the 6% area, a market source said.

That Yapi Kredi “came to market on the day of the [Federal Reserve rate hike] is unusual but something that was possible given just how strong [the market] is and just how well priced-in the rate hike was to market expectations,” a market source said.

“There’s a degree of segmentation in the market” as it relates to Yapi Kredi’s lira-denominated issue last week and Wednesday’s dollar-benchmark issue “but I think both indicative of robust risk appetite” in the market as a whole, a market source said.

The Federal Reserve 25-basis point rate increase on Wednesday, the third of four expected this calendar year, did not have as much effect as did the consumer prices data release, which underscored the dip in U.S. Treasury yields that sent tremors in emerging markets, a source said.

In the secondary market on Thursday, the new Yapi Kredi issue was up ½ point to 100½, a market source said.

Turkey stays the course

The Central Bank of Turkey kept interest rates unchanged on Thursday, in line with expectations on the back of data that shows “recovery in the economic activity has gained pace,” the bank said in a news release.

“Tight stance in monetary policy will be maintained until inflation outlook displays a significant improvement,” the bank said. “Inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.”

“The central bank is in a somewhat comfortable position given the very strong market backdrop,” a market source said, adding that currency value and strong economic data made the Central Bank’s decision easier.

Two debuts from Asia

China’s Tunghsu Group Co., Ltd. and India’s Mphasis both debuted in international markets with issues on Wednesday and Thursday, market sources said.

Tunghsu, a Beijing-based equipment manufacturer, priced $350 million 7% three-year notes at 99.337 to yield 7¼% (B/B+) on June 7, the company and a market source said.

Goldman Sachs was the global coordinator and bookrunner for the deal.

Mphasis sold $500 million five-year notes at par to yield 5.3% on Wednesday, a market source said.

The bonds were issued through investment holding company Marble II Pte. Ltd.

Price talk for the Rule 144A and Regulation S notes (Ba2//BB) was 5.3%, which had tightened from the 5.4% area.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.