Roadshow for Ahli United Bank; Asian bonds firm; SECO sees demand; Petrobras under pressure

By Christine Van Dusen

Atlanta, April 13 – Bahrain’s Ahli United Bank set a roadshow for a dollar-denominated issue of notes on a firm Monday for Asian bonds, with high-grade cash notes closing unchanged to 3 basis points tighter.

“Demand from real-money accounts continued to drive the market tighter in the absence of new issue,” a London-based trader said.

High-grade property companies from China continued to outperform, closing 2 bps to 10 bps tighter, he said. And high-yield property companies from China saw mostly buyers and finished the session up ¼ point to ½ point.

“India is generally unchanged, with good demand in short-end financials,” he said. “High-yield sovereigns closed unchanged to ¼ point lower on light flows.”

Meanwhile, trading was “fairly lackluster” for Middle Eastern bonds on Monday, though spreads generally performed as rates dipped slightly, the trader said.

“Still seeing topping up on perpetuals and even some high-yield names, although liquidity is getting a tad challenging on the latter,” he said. “The long end still has support, even in the face of rates trading off.”

Saudi Electricity Co. saw demand, as did the long end of the Qatar curve, he said.

“DPWorld’s 2037s have traded in decent size the past week and hold in 10 bps tighter on the week,” he said. “Dare I say it, but the market could do with a little more supply.”

In other trading, Latin American bonds got off to a “sleepy start” on Monday, a New York-based trader said.

The few Street prints he saw during the morning session were from Brazil-based Petroleo Brasileiro SA, Brazil’s Vale SA and Mexico’s Cemex SAB de CV, which all traded close to their closing prices from Friday.

Pacific Rubiales sees buyers

Toronto-based and Colombia-focused Pacific Rubiales Corp. saw mostly buyers on Monday and held on to gains from the previous week, the New York trader said.

Also holding on to gains were Colombia’s Ecopetrol SA and Chile’s Cencosud SA, he said. Cencosud, in particular, benefitted from high demand for investment-grade Chilean paper.

Meanwhile, Peru’s Union Andina de Cementos SAA (Unacem) moved close to an all-time high, he said.

Petrobras under pressure

Later in the session, Petrobras’ spreads came under some pressure on the news that the company is planning to sell its stake in Braskem SA as part of a divestment plan, the New York-based trader said.

Braskem’s spreads were also under pressure, but not as much, he said.

Petronas performs

The long end of the curve for Malaysia-based Petroliam Nasional Bhd.’s (Petronas) bonds performed well on Monday, a trader said.

The company recently printed a $5 billion issue of notes due in five, seven, 10 and 30 years, including 2.707% Islamic bonds due in 2020 that priced at par to yield Treasuries plus 110 bps via BofA Merrill Lynch, CIMB and Deutsche Bank in a Regulation S deal.

“The Petronas complex consolidated, with Petronas’ 2020 sukuk trading down,” he said. “The long end is unchanged and well-bid.”

Ahli United Bank sets roadshow

Bahrain’s Ahli United Bank will set out on a roadshow for a possible issue of dollar-denominated bonds, a market source said.

The roadshow will end on April 21.

Other details were not immediately available on Monday.

The company previously announced plans to issue up to $4 billion of bonds, loans and other instruments.

Kaisa reappoints chief exec

Some investors on Monday were watching China-based Kaisa Group Holdings Ltd., which reappointed its founder as chief executive, a move that seemed to boost the market’s confidence in the property development company’s ability to restructure its debt.

The founder had resigned on Dec. 31.

“This improves market sentiment,” according to a report from Schildershoven Finance BV. “Market responded positively on the news. Kaisa eurobonds rebounded by about 4%.”

In another possibly positive development, a group of bondholders is planning to hire a financial adviser to offer ideas on Kaisa’s restructuring proposal.

Still, Kaisa’s problems loom large, the bank said, and investors should “stay away.”

In other news from Asia, China-based Sound Group Ltd. is planning to sell a 30% stake in a subsidiary, leaving the wastewater treatment company with a 15% in Sound Environmental and a 51% stake in the parent company, a market source said.

In response, the company’s bonds climbed by about 11%, Schildershoven said.

Africa Finance markets deal

Also on Monday, Nigeria’s Africa Finance Corp. kicked off its roadshow for a possible bond offering with a stop in Singapore, a London-based trader said.

“If AFC was thinking of a five-year deal, the obvious comparables would be [African Export-Import Bank (Afreximbank)] and Nigeria,” he said.

Afreximbank’s 4¾% 2019s were spotted at 101¾ bid, 102¾ offered on Monday while Nigeria’s 5 1/8% 2018s traded at 100¼ bid, 101¼ offered, he said.

Africa Finance is known for having an “impressive” record with non-performing loans, he said.

“It’s smaller than Afreximbank,” he said. “Unlike Afreximbank it does not have the questions regarding capital.”

Citigroup, MUFG Securities, Standard Bank and Standard Chartered Bank are arranging the roadshow, which will head to London on April 20.

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