Issuance from China Longyuan Power, Hungary Eximbank, Synthos; Russian corporates tighten

By Christine Van Dusen

Atlanta, Sept. 25 – China Longyuan Power Group Corp. Ltd., Hungary’s Magyar Export-Import Bank (Hungary Eximbank) and Poland’s Synthos SA printed notes on Thursday as corporate bonds from Russia rallied and Latin American corporates took a beating in trading.

Russian corporates improved amid headlines that the sovereign’s troops were being pulled out of Ukraine.

“Some names are over 100 basis points tighter,” a London-based analyst said. He pointed to Russia-based Evraz Group’s 2017s, which tightened by 105 bps over the previous week, and the Sibur Holdings bonds due 2018 that have narrowed 77 bps.

“We remain optimistic on Russian credit but think the rally could fade as we move closer to the end of the month, when the European Union is expected to review the ceasefire,” he said.

Investors remain uncertain as to whether the European Union will then remove sanctions against Russian companies.

“If the ceasefire continues to hold,” he said, “the EU will feel pressure to begin dropping certain sanctions.”

In other news from Russia, a Moscow court decided to keep AFK Sistema’s chairman under house arrest for allegedly laundering money. In response, Sistema’s bonds have performed well, trading at about $90 after moving as low as $81, he said.

Investors are showing “optimism about a potential release of the chairman,” he said.

The picture was much bleaker for Latin American corporates, a New York-based trader said, which put in their weakest day in months.

Though some names regained ground by the end of trading on Wednesday, Thursday was a different story, with risk-off trading hurting most assets and killing liquidity.

Bonds from Brazil’s Petroleo Brasileiro SA (Petrobras) and Vale SA moved wider and bids for Mexico-based Cemex SAB de CV were hit, he said.

Turkey CDS narrow

Meanwhile, credit default swaps spreads for Turkey narrowed, driven mostly by flows back into Russian names, the analyst said.

“Assuming the improvement in Russian credit continues, we expect Turkey could continue to feel pressure,” he said.

Middle East in focus

From the Middle East, bond spreads struggled on Thursday, a London-based trader said.

Buyers were plentiful for Emirates Islamic Bank’s perpetual notes, which closed the European session at 100.35 bid, 100.55 offered.

And the recent issue of notes from Kuwait-based Burgan Bank bounced off the low of 99.62 to close at 99.80 bid, 99.90 offered, he said.

“With some names it still feels like there’s some paper around,” he said. “This market is not racing away, by any means.”

Bahrain’s 2044 dollar notes moved a couple of bps wider, he said, as did the Emirate of Sharjah’s 2024s.

“Both had been doing well, so perhaps some profit-taking was witnessed,” he said.

Longyuan Power issues notes

China Longyuan Power, through subsidiary Hero Asia Investment Ltd., priced $500 million 2 7/8% notes due Oct. 3, 2017 at 99.207 to yield Treasuries plus 210 bps, a market source said.

Goldman Sachs, Agricultural Bank of China, Citic Securities International, Wing Lung Bank, Bank of China and HSBC were the bookrunners for the Regulation S deal.

The issuer is a Beijing-based wind power producer.

Hungary Eximbank prints bonds

In its new deal, Hungary Eximbank sold $500 million 4% notes due Jan. 1, 2020 at a yield of 4.15%, a market source said.

Deutsche Bank, JPMorgan and UniCredit were the bookrunners for the deal.

Other details were not immediately available on Thursday.

The issuer is based in Budapest.

Synthos sells notes

Poland’s Synthos, through Synthos Finance AB, priced €350 million 4% notes due Sept. 30, 2021 at par to yield 4%, a market source said.

The notes were talked at a yield in the 4¼% area.

BNP Paribas, Citigroup and Deutsche Bank were the global coordinators and lead managers. Banco Santander, ING, PKO BP and UniCredit were the passive bookrunners for the Rule 144A and Regulation S deal.

The issuer produces synthetic rubber and styrenics.

Mexican retailer prices notes

Mexico’s El Puerto de Liverpool SAB de CV launched a $300 million issue of 10-year notes points at a spread of Treasuries plus 165 bps, a market source said.

The notes were talked at a spread in the 175 bps area.

BofA Merrill Lynch and Citigroup are the bookrunners for the Rule 144A and Regulation S deal.

The retail company is based in Mexico City.

New deal from Chinese bank

On Wednesday, China’s Bank of Communications sold $1.2 billion 4½% notes due in 2024 at 99.434 to yield Treasuries plus 285 bps, matching talk, a market source said.

JPMorgan, Bank of Communications Hong Kong Branch, Citigroup, HSBC, Deutsche Bank, Credit Suisse, BNP Paribas and Bocom International were the bookrunners for the Regulation S deal.

The proceeds will be used to boost the company’s tier 2 capital.

Bank of Communications is a Shanghai-based financial institution.

© 2015 Prospect News.
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