Gabon sells notes; mixed trading amid Treasury turbulence; recent Asian issues draw orders

By Christine Van Dusen

Atlanta, June 9 – Gabon was among the issuers to print notes on Tuesday as undulations in U.S. Treasury rates made for a mixed session for emerging markets assets.

“Busy day, all told,” a London-based trader said. “The 2.42% on the 10-year Treasury has brought some paper out. Although, as usual, there are enough squeezed technical bonds out there that remain. I get the sense they are slowly but surely being taken out.”

Spreads were “all over the place, depending on flows,” he said. “Liquidity remains challenging and, as I keep barking on about, cannot improve into Ramadan and summer, which are drawing closer and closer.”

Looking to Latin America, spreads were mixed for low-beta bonds, which moved to their widest points by late in the day, a New York-based trader said.

Five-year credit default swaps spreads for Brazil outperformed, moving to 246 basis points from 248 bps, while Mexico saw its CDS move to 130.5 bps from 131 bps. Earlier in the day, Mexico’s spread was as tight as 129 bps, he said.

High-yield bonds from Latin America were also mixed, with Venezuela and PDVSA climbing higher alongside a move in oil, he said, while Argentina finished mostly unchanged.

“Good flows for the session as volume picks up from yesterday, with a skew to better selling,” he said.

In deal-related news, China’s Haikou Meilan International Airport and Peru’s Lima Metro Line 2 Finance Ltd. gave guidance while market sources whispered about a possible $1 billion issue from Pakistan in 2016.

Chile in focus

Chile-based Cencosud SA suffered “severe weakening” along the curve for the first time since Latin American bonds started their sell-off, another New York trader said.

The company’s 2045s suffered the most amid rates pressure, he said.

In other trading from Chile, most of the “bolder” credits moved “markedly lower on very little inquiry,” he said.

Gabon sells bonds

In its new deal, Gabon priced a $500 million issue of notes due in 10 years (Ba3/B+/B+) at a yield of 6.95%, a market source said.

The notes priced tighter than initial talk, set at 7¼%.

Deutsche Bank, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

Other details were not immediately available on Tuesday.

CFE launches notes

Mexico’s Comision Federal de Electricidad SA (CFE) launched a $700 million issue of 30-year notes at Treasuries plus 300 bps, a market source said.

BBVA, BofA Merrill Lynch, Citigroup, Goldman Sachs, HSBC, Morgan Stanley and Scotiabank are the bookrunners for the deal.

The deal was initially talked at a spread in the high-200 bps area.

CFE is a Mexico City-based electric company.

Haikou airport sets talk

China’s Haikou Meilan International Airport set talk in the 7½% area for a renminbi-denominated issue of benchmark-sized notes due in three years, a market source said.

Societe Generale CIB is sole global coordinator, and ABC International and Shanghai Pudong Development Bank are the other joint bookrunners for the deal.

The proceeds will be used for general corporate purposes.

Lima Metro Line gives guidance

Peru’s Lima Metro Line 2 Finance set initial talk in the 6% area for 19.1-year issue of dollar-denominated notes, a market source said.

Citigroup, Morgan Stanley and Santander are the bookrunners for the Rule 144A and Regulation S deal.

Pricing could take place as soon as Wednesday.

Lima Metro Line 2 is a government initiative that aims to improve the public transportation infrastructure in Lima.

Korea Hydro attracts orders

The new issue of notes that Korea Hydro & Nuclear Power Co. priced on Monday – $300 million 3¼% notes due 2025 that came to the market at 99.24 to yield Treasuries plus 95 bps – drew a final order book of $1.25 billion from 80 accounts, a market source said.

BNP Paribas, Citigroup, Goldman Sachs and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

About 79% of the orders went to Asia, 16% to Europe and 5% to the United States, with 42% to asset and fund managers, 27% to banks, 15% to insurers, 14% to sovereign wealth funds and central banks and 2% to private banks.

Zhongrong releases final book

China-based Zhongrong International Trust Co. Ltd.’s new $225 million 6% notes due June 15, 2018 that priced Monday at par saw a final order book at $575 million from 64 accounts.

Huatai Financial Holdings, Barclays and DBS Bank were the bookrunners for the Regulation S deal.

About 95% of the orders came from Asia and 5% from Europe, with 49% from private banks, 26% from asset and fund managers, 24% from banks and 1% from pension funds.

Anhui deal oversubscribed

The final book for China-based Anhui Transportation Holding Group Co. Ltd.’s new $300 million issue of 2 7/8% notes due 2018 that priced Monday at 99.687 to yield 2.985%, or Treasuries plus 195 bps, was $3.5 billion, a market source said.

HSBC and Wing Lung Bank were the bookrunners for the Regulation S deal.

The proceeds will be used primarily for refinancing and general corporate purposes, the agency said.

About 93% of the orders were from Asia and 7% from Europe, the Middle East and Asia.

Banks picked up 62%, fund managers 23%, private banks 14% and insurers and others 1%.

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