Issuance from Hsin Chong, Slovakia; EM suffers, then rallies again; roadshow set for Mongolia

By Christine Van Dusen

Atlanta, Jan. 14 – China’s Hsin Chong Construction Group Ltd. and Slovakia sold notes on Thursday as risky assets weathered another turbulent session, at first suffering – perhaps under the weight of the strong dollar and oil prices – and later tightening into the end of the day.

“Earlier on it looked like the markets were in for another bumpy ride, but we made a nice bounce mid-morning and never looked back,” a trader said.

Five-year credit default swaps spreads for Brazil ended at 487 basis points from 502 bps, while Mexico’s moved to 190 bps from 194 bps.

The new issue of notes from Mexico – $2.25 billion 4 1/8% notes due 2026 that priced Wednesday at 99.676 to yield 4.165%, or Treasuries plus 210 bps – was being offered without a bid on Thursday, he said.

“Cash prices get a modest lift, but Treasury volumes kept levels a bit subdued despite the rally in other risk assets and overall spread tightening,” he said.

Still, high yielders from Latin America did weaken, with Venezuela’s 2027s finished Thursday at 34 from 35 and PDVSA’s 2017s ending up at 41.25 from 43.50.

Meanwhile, bonds from Asia opened 4 bps wider but managed to tighten “a touch” as the morning went on, another trader said.

“Overall, flows are on the lighter side as compared with yesterday,” he said. “Hopes are that we can finish the week on a positive note.”

Cameroon bonds struggle

Looking to Africa, the $750 million 9½% amortizing notes due 2025 that Cameroon priced in November struggled on Thursday.

“Despite the oil sector only accounting for 27% of government revenues and 7% of the economy, [Cameroon has] been treated in line with the likes of Angola and Gabon,” another trader said.

The latter two sovereigns rely on oil for 80% and 45% of their revenues, respectively.

“They have all been taken to the woodshed in this recent selloff,” he said.

Hsin Chong prices notes

In its new deal, China’s Hsin Chong Construction Group priced $150 million 8½% notes due Jan. 22, 2019 at par to yield 8½%, a market source said.

Credit Suisse, UBS, China Merchants Securities and Nomura Securities were the bookrunners for the Regulation S deal.

The proceeds will be used for refinancing existing indebtedness, providing working capital for the construction business and for general corporate purposes.

The construction and property company is based in Hong Kong.

Slovakia sells bonds

Slovakia priced €1 billion notes due Jan. 21, 2031 (A2/A+/A+) at a spread of mid-swaps plus 38 bps, a syndicate said.

Barclays, Erste Group and Natixis were the bookrunners for the Regulation S deal.

Other details were not immediately available on Thursday.

Mongolia sets roadshow

Mongolia will set out on Jan. 18 for a roadshow to market a dollar-denominated issue of notes, a market source said.

Credit Suisse, Deutsche Bank, ING and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow will take place in Asia, Europe and the United States.

Hon Kong Airlines final book

The final book for Hong Kong Airlines’ new $180 million 6.9% notes due Jan. 20, 2019 – which priced Wednesday at 99.071 to yield 7¼% – was $260 million from 46 accounts, a market source said.

About 97% of the deal came from Asian accounts and 3% from European accounts, with private banks picking up 59% and fund and asset managers taking 41%.

The notes were talked in the mid-7% area.

Guotai Junan International, JPMorgan, BOC International and Hong Kong International Securities were the bookrunners for the Regulation S deal.

Proceeds will be used for general corporate purposes.

EXIM India attracts orders

Export-Import Bank of India’s (EXIM India) new issue of $500 million 3 1/8% notes due July 20, 2021 that priced Wednesday at 99.585 to yield 3.208%, or Treasuries plus 165 bps, attracted a final order book of $1.1 billion from 110 accounts, a market source said.

Citigroup, JPMorgan and Standard Chartered Bank were the bookrunners for the Regulation S deal.

About 47% of the orders came from Europe, the Middle East and Asia and 7% from United States offshore accounts. Asset and fund managers picked up 49%, banks 26%, private banks 9%, insurers 8% and central banks and public institutions 8%.

On Thursday the notes traded between Treasuries plus 173 bps and Treasuries plus 170 bps.

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