Issuance from Kexim; EM assets improve on QE hopes in Europe; Brazilian corporates widen

By Christine Van Dusen

Atlanta, Oct. 1 – Korea Export-Import Bank sold notes and emerging markets assets opened stronger on Wednesday, recovering somewhat from recent weakness, as the increasing likelihood of quantitative easing in Europe boosted spirits.

Meanwhile, the European Union meeting on Tuesday that focused on the conflict between Russia and Ukraine was mostly uneventful, with sanctions remaining in place, a London-based analyst said.

Officials made only a brief statement after the meeting, highlighting encouraging developments in the peace process, but pointed out that further progress is needed before the sanctions can be lifted.

“As long as the ceasefire officially holds, and assuming there is progress on buffer zones, we still think there will be pressure on the EU to drop certain sanctions,” the analyst said. “But clearly October, particularly with the planned Ukraine elections at the end of the month, could present opportunities for an escalation in tensions.”

Russian credit default swap spreads were about 4 basis points tighter, he said.

“Turkey credit default swaps are 3 bps tighter, and Central and emerging Europe and the Middle East are also better as the market recovers from the recent weakness,” he said.

Also improving the picture on Wednesday was the increasing likelihood of quantitative easing in Europe.

Meanwhile, bonds from Brazil-based Petroleo Brasileiro continued to widen, moving out on the month by as much as 30 bps on the long end and 20 bps in the belly of the curve, a New York-based trader said.

The company’s 2024s widened 60 bps on the month, he said.

This came against a backdrop of serious weakness in the Brazilian debt market, as investors assumed Brazil President Dilma Rousseff would win this weekend’s elections.

Lat-Am corporates in focus

Taking a closer look at Latin American bonds, spreads were “markedly worse” for some high-grade names on Wednesday, another New York-based trader said.

Names like Brazil’s Braskem SA and Gerdau SA widened as much as 20 bps during the session.

Activity was limited for bonds from Peru and Chile, he said, while Mexico’s Cemex SAB de CV stood out.

The curve managed some small gains and selling tapered off, he said.

Oman bank notes tick up

The new issue of notes that National Bank of Oman SOAG priced on Tuesday – $500 million 3 1/8% notes due 2019 that came to the market at 99.177 – traded Wednesday morning at 99.70, a trader said.

The notes priced with a yield 3.305%, or mid-swaps plus 135 bps, with bookrunners Credit Agricole CIB, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S deal.

The final book was $1.6 billion, with 52% of the orders coming from the Middle East and North Africa, 43% from Europe, 4% from Asia and 1% from the offshore United States.

Funds picked up 47%, banks 41%, insurers and pension funds 7% and private banks 5%.

Value in Gazprom Neft

In other trading on Wednesday, Russia-based Gazprom Neft saw its 2023 bonds trade about 75 bps over the OAO Gazprom curve, a trader said.

Gazprom Neft this week received a RUB 30 billion credit line from Russian Agricultural Bank, to be used for general corporate purposes.

“Gazprom Neft already has a strong debt maturity profile, so although this development is positive, we see it as fairly credit-neutral,” he said. “We continue to see value in Gazprom Neft.”

Synthos struggles

Also on Wednesday, the recent issue of notes from Poland’s Synthos SA – €350 million 4% notes due 2021 that priced at par – struggled in the secondary market, a trader said.

The bonds have fallen more than 2 points as investors wonder whether the synthetic rubber producer set an unrealistic price target.

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.

Kexim prints bonds

Korea Export-Import Bank priced Ł300 million 2% notes due Dec. 7, 2017 at 99.783 to yield Gilts plus 110 bps, a market source said.

ANZ and HSBC were the bookrunners for the deal.

The issuer is based in Seoul.

Kazakhstan to issue notes

Kazakhstan is looking to price a 10-year issue of dollar-denominated notes next week, a market source said.

A roadshow for the transaction will conclude on Friday.

HSBC, Citigroup and JPMorgan are the bookrunners for the deal.

GES plans offering

NEAH GES USA Inc. is looking to print new senior notes maturing in 2019 and 2024 alongside an issue of $100 million of its preferred stock, according to a company announcement.

The proceeds from the senior Rule 144A and Regulation S notes will be used to fund the proposed acquisition of South Africa-based Quemic’s operations in Ghana and Mozambique, to acquire United Kingdom-based Graspon Frankton Maritime and to purchase Bell twin engine 412 utility helicopters.

NEAH USA is part of Dubai-based NEAH Global Energy Solutions (GES), a power generation, infrastructure, maritime, aviation and logistics provider based in Dubai.

© 2015 Prospect News.
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