Takeover proceeds for Pacific Rubiales; less volatility in Treasuries; CFE roadshow ahead

By Christine Van Dusen

Atlanta, May 21 – Latin America-focused Pacific Rubiales Energy Corp. was in focus on a firm Thursday for emerging markets assets after the Federal Open Market Committee’s minutes – indicating that a rate hike in June is unlikely – helped U.S. Treasuries recover.

“Flows leaned heavily towards better buying in the high-grade space, with plenty of buyers seeking paper in the technology, energy and financial sectors,” a London-based trader said.

Mexico-based Alfa SAB de CV and Harbour Energy Ltd. on Thursday moved forward with their takeover of Pacific Rubiales, buying the company for about $5.30 a share in an all-cash deal that was approved by the board of directors.

Pacific Rubiales’ bond curve moved up a few points on Thursday morning in response, though Street trades were scarce while investors tried to get a handle on what complications might arise from the takeover, a New York-based trader said.

The company’s 2019s were seen trading between 95 and 97 before moving to 94¼ bid, 99½ offered while the 2021s were spotted at 96½ to 97½ before trading at 97 bid, 97¾ offered. Pacific Rubiales’ 2025s traded between 87 and 88 before moving settling in at 87 bid, 87¾ offered.

“Street volumes consistent, but not heavy,” a trader said. “Trace volume very strong, customers pretty quiet all things considering. Liquidity is as good as it’s been this week.”

By the afternoon Pacific Rubiales’ bonds had risen to highs of the year.

In other news, Indonesia set talk and Mexico’s Comision Federal de Electricidad SA (CFE) planned a roadshow for their upcoming issues.

Lat-Am firms

Other bonds from Latin America were firmer on Thursday morning as Treasuries moved higher and some volatility subsided, another trader said.

By the close in New York, most sovereigns were a few bps tighter on the day, with Brazil a standout, he said, as Treasuries rallied into the end of the day.

Argentina’s bonds were slightly higher to unchanged while Venezuela and PDVSA rallied with a move higher in the price of oil, he said.

Kunlun tightens

In trading from Asia, China-based Kunlun Energy Co. Ltd.’s new 2 7/8% notes due 2020 that priced at 99.557 moved 2 basis points tighter, he said.

“Korea and India investment grade also saw demands on the financial names during London hours,” he said. “The high-yield front started the day soft, but the market quickly headed northbound on light supplies of paper.”

Property companies from Asia saw their bonds move ¼ point to 3/8 points higher.

“Plenty of interests for risk-takers searching for semi-distressed and underperforming names,” he said.

Sinochem prints notes

In a small deal, China’s Sinochem Offshore Capital Co. Ltd. priced CHF 250 million 0.76% notes due June 17, 2022 at par to yield 0.76%, or mid-swaps plus 77 bps, a market source said.

HSBC and UBS were the bookrunners for the deal.

Sinochem Offshore is a wholly owned subsidiary of Sinochem Hong Kong (Group) Co. Ltd., a Hong Kong-based business conglomerate with interests in agriculture, energy, chemicals, real estate and finance.

Indonesia gives guidance

Indonesia set talk in the 4.55% area for a dollar-denominated issue of Islamic bonds due in 10 years, a market source said.

HSBC, CIMB Group, Dubai Islamic Bank and JPMorgan are the bookrunners for the deal.

CFE sets roadshow

Mexico-based electric company CFE will depart on May 27 for a roadshow to market a possible issue of notes, a market source said.

BBVA, BofA Merrill Lynch, Citigroup, Goldman Sachs, HSBC, Morgan Stanley and Scotiabank are leading the marketing trip.

The roadshow will begin in Mexico City and travel to Los Angeles, London and Boston before concluding on June 3 in New York.

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