New issue from Korea Development; Swire, Jiangsui set talk; roadshows for AirAsia, Sharjah

By Christine Van Dusen

Atlanta, Jan. 6 – Korea Development Bank sold notes and some issuers – including Malaysia’s AirAsia Bhd. and the Emirate of Sharjah – set roadshows on Wednesday as the yuan moved lower, commodities weakened, U.s. Treasuries were better-bid and risk markets struggled.

“[Emerging] markets are opening softer this morning,” a London-based strategist said.

Also impacting sentiment was the news that North Korea may have conducted another nuclear test, according to a report from Barclays Capital.

And “the escalation of tension in the Middle East has increased uncertainty, but the effect on oil prices is not clear-cut,” the report said.

Latin American bonds tried to hold on to the previous day’s gains amid better buying, a New York-based trader said.

“Colombia banks continue to see better buyers,” he said. “Bank of Colombia 2021 and 2022 have shot up nicely in the last few weeks.”

High-grade petrochemical credits from Mexico moved higher, he said, but Brazil’s Petroleo Brasileiro SA and Vale SA moved lower on Wednesday morning.

High-grade names from Chile were “subdued” amid small gains, he said.

“Overall it feels like we are getting back some liquidity,” he said. “Clients are beginning to work off the eggnog and are more active. We should see some new deals in the pipeline very soon. There is, however, a pretty strong cautious undertone present right now, or at least that how it feels.”

Latin American debt ended up on solid footing, with Brazil’s five-year credit default swaps spreads tightening to 482 basis points from 486 bps, a trader said.

Mexico CDS widen

Mexico’s credit default swaps widened, however, moving to 178 bps from 171 bps.

“Cash prices hold a relentless bid throughout the session as the market was able to look past the equity and commodity rout and instead focus on some moderate spread widening and the rally in U.S. Treasuries,” the trader said.

Venezuela stays weak

Venezuela and PDVSA remained weak while Argentina stayed strong, the trader said, with PDVSA’s 2017s moving to 50 from 51.25 and Venezuela’s 2027s to 38.50 from 39.25.

“Argentina is more or less unchanged, with the Bonar 2024s at 107,” the trader said. “Good two-way flows throughout the session with lots of Street and client activity. EM sovereign external credit is doing a good job at weathering this storm, but if we see some follow-through of today’s events, it may become increasingly difficult to justify the recent bid.”

Middle East moves wider

From the Middle East, bonds remained under pressure and continued to widen, a London-based trader said.

“Qatar had a very heavy session, with the long end off the best part of seven points versus mid-December,” he said. “The belly has been very well-offered for a while now, with credit default swaps pushing out to 100 bps.”

Liquidity, he said, was “very tricky.”

Korea Development sells notes

In its new deal, Korea Development Bank priced a $1.5 billion two-tranche issue of notes due Jan. 13 of 2021 and 2026, a market source said.

The $500 million 2˝% five-year notes priced at 99.986 to yield 2.503%, or Treasuries plus 82.5 bps, following talk in the 85-bps area.

The $1 billion 3% 10-year notes priced at 99.401 to yield 3.07%, or Treasuries plus 87.5 bps, after talk in the 90-bps area.

Barclays, BofA Merrill Lynch, Citigroup, Credit Suisse, HSBC, KBD Asia, Mizuho Securities and Societe Generale were the bookrunners for the Regulation S deal.

The proceeds will be used for general operations, including the extension of foreign currency loans and the repayment of maturing debt and other obligations, according to a company filing.

Guidance from Swire

China’s Swire Properties Ltd. set talk in the Treasuries plus 150-bps area for an issue of benchmark-sized and dollar-denominated notes due in 10 years, a market source said.

HSBC and JPMorgan are the bookrunners for the Regulation S deal.

The notes will be issued by Swire Properties MTN Financing Ltd. and guaranteed by the company.

Swire Properties is a commercial, retail and residential property developer and manager.

Jiangsui NewHeadline sets talk

China’s Jiangsu NewHeadLine Development Group Co. Ltd. – through Zhiyuan Group (BVI) Co. Ltd. – set talk at 6.2% to 6.3% for a three-year issue of dollar-denominated notes due in three years, a market source said.

Guotai Junan International is the sole global coordinator for the Regulation S deal and, with CCB International DBS Bank Ltd., a joint lead manager and joint bookrunner.

A roadshow began on Monday.

The proceeds will be used for infrastructure development projects, refinancing of existing indebtedness, working capital and general corporate purposes.

AirAsia plans marketing trip

Malaysia’s AirAsia, via AirAsia Global Notes Ltd., will begin a roadshow on Thursday for an issue of up to $1 billion of notes, a market source said.

Barclays Bank (Singapore branch) is the sole arranger and – with Barclays, CIMB and RHB – joint bookrunners and joint lead manager for the deal.

The roadshow will be held in Singapore, Hong Kong and London.

Sharjah sets roadshow

Sharjah will set out on Jan. 10 for a roadshow to market a dollar-denominated issue of Islamic bonds, a market source said.

HSBC is the global coordinator and Bank of Sharjah, Barclays, Commerzbank, Dubai Islamic Bank, HSBC and Sharjah Islamic Bank are the joint lead managers and bookrunners for the Regulation S deal.

The roadshow will be held in the Middle East, Asia and the United Kingdom.

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