Pemex prints bonds; weak global tone hurts EM; Russian CDS widen; Kuwait Energy performs

By Christine Van Dusen

Atlanta, Oct. 3 – Mexico’s Petroleos Mexicanos SAB de CV (Pemex) sold notes on Friday, ending a rough week for emerging markets assets.

“[Emerging markets] was affected by the generally weak global risk tone this week,” a London-based analyst said. “[This was] driven by factors such as the Hong Kong protests, the Ebola case in the United States, Brazil election uncertainty, Bill Gross’ departure from Pimco, a flare-up in fighting in Ukraine, commodity price concerns and no positive surprises from the European Central Bank.”

Russia, still clashing with Ukraine, saw its credit default swaps spread move 12 basis points wider on the week while Russian banks moved out an average of 38 bps, he said.

Russian corporates widened an average of 42 bps.

Particularly weak was AFK Sistema, following the arrest of its chairman and a court’s decision to stop Bashneft Group dividends, he said. Sistema’s 2019s were 151 bps wider.

Investors were also keeping an eye on Turkey during the week, which faces a ratings review.

“Turkey, like the rest of [emerging markets], was wider on the week, but recovered a little mid-week,” the analyst said. “Turkish CDS is 1 bp wider on the week.”

From the Middle East – where activity was light, ahead of the Eid holidays – the week’s best-performing bond was Kuwait Energy’s 2019s, a London-based trader said.

“It’s the only bond to be able to muster any real tightening of any shape or form,” he said.

Also from the Middle East, bank bonds widened 7 bps, the London trader said.

“The new Burgan Bank, however, had a strong week, tightening 24 bps,” he said. “Investors are attracted to the Kuwaiti risk.”

The weakest performers were the perpetual notes from Emirates NBD and Abu Dhabi Islamic Bank, he said. They widened 37 bps and 28 bps, respectively.

Pemex prices floaters

In its new deal, Mexico’s Pemex priced $500 million floating-rate notes due April 15, 2025 at par to yield Libor plus 35 bps, a market source said.

BNP Paribas, Citigroup and Santander were the bookrunners for the notes, which are guaranteed by the Export-Import Bank of the United States.

The proceeds will be used to purchase U.S. goods and services.

Pemex is a Mexico City-based petrochemical company.

Order book for Tuan Sing

Singapore’s Tuan Sing Holdings Ltd. drew a final order book of about S$300 million for its new issue of S$80 million five-year notes, a market source said.

The notes priced Thursday at par to yield 4½% with bookrunners DBS and HSBC.

About 99% of the orders came from Singapore and 1% from others, with 96% from private banks and 4% from others.

The proceeds will be used for property development and investment as well as for general corporate purposes, which include refinancing borrowings and financing investments and general working capital.

Based in Singapore, Tuan Sing’s businesses include property, hotel investment and industrial services

U.K. likes Seven Energy

Nigeria-focused Seven Energy International Ltd.’s new issue of $300 million 10¼% notes due 2021 drew 40% of its orders from the United Kingdom, a market source said.

The notes priced on Thursday at 98.781 to yield 10½%, following talk in the 10½% area.

In July the issuer announced talk in the mid-9% area for a $500 million issue of seven-year notes through Seven Energy Finance Ltd., but the deal never materialized.

Deutsche Bank, Morgan Stanley and Standard Chartered Bank were the bookrunners for the new Rule 144A and Regulation S deal.

The proceeds will be used for capital expenditures, general corporate purposes and to redeem convertible bonds and refinance existing debt.

About 35% of the orders came from the United States, 10% from Asia, 9% from Europe and 6% from Africa.

Fund managers picked up 61%, central banks and supranationals 26% and banks and private banks 13%.

© 2015 Prospect News.
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