Limited liquidity; roadshows for Bahrain, Beijing Properties, Huarong; Dubai bank deal on deck

By Christine Van Dusen

Atlanta, Nov. 9 – Emerging markets assets were weaker on Monday and liquidity began to dry up as softness in U.S. Treasuries and commodities – as well as Friday’s strong economic data from the United States – created volatility ahead of the Veterans Day and Thanksgiving holidays.

“Looks like we could have a tricky week ahead of us,” a London-based trader said. “The rate-rise probability is up to 70% ... it feels like we are setting up for a bearish year-end in EM.”

The bond curve for Turkey, which weakened on Friday, is expected to continue to flatten this week, he said.

“Parts of Africa are very well offered – Nigeria, Egypt, Morocco,” another trader said. “South Africa corporates and quasi-corporates are all heavy.”

Bonds from Lebanon were well offered, he said.

“Typically a defensive credit,” he said. “Still feels a little soggy in the Middle East in the secondary.”

Investors were keeping an eye on Jordan, which has $750 million of bonds set to mature this Thursday.

“The recent $500 million 2026 will become the only Jordanian bond outstanding,” another trader said.

Those notes, with a 6 1/8% coupon, priced last week at 98.155 to yield 6 3/8% via Citigroup and JPMorgan in a Rule 144A and Regulation S deal.

On Monday morning the notes were trading at 100.65 bid, 101½ offered, he said. Later they moved to 101.

The deal drew a final order book of more than $2.6 billion, with 40% of the orders from the United Kingdom, 38% from the United States, 14% from Europe and 8% from Asia and the Middle East.

Fund managers picked up 85%, banks 11% and others 4%.

Angola ticks slightly higher

Angola’s recent issue of notes – 9½% 10-year notes that priced at par to yield mid-swaps plus 738 basis points – traded at par bid, 100¼ offered on Monday, another trader said.

Deutsche Bank, Goldman Sachs and ICBC International were the bookrunners for the Rule 144A and Regulation S deal.

Lat-Am moves lower

Looking to Latin America, most names moved lower on Monday morning, a New York-based trader said.

Some weakness set in for Brazil-based Petroleo Brasileiro SA after recent gains, and Brazil-based Vale SA widened, he said.

“Colombia banks continue their descent as [the currency] weakens,” he said. “Mexico high-grade are also way off recent highs, when just over a week ago you couldn’t source credits.”

Wider spreads

At the end of the day, most Latin American spreads were wider, with five-year credit default swaps spreads from Brazil closing at 423 bps from 409 bps and Mexico’s ending at 153 bps from 148 bps.

“Cash prices were well-offered throughout the session as prices move lower by ¾ point to 1 point,” another New York trader said. “Latin American high yield does little on the day and finishes mostly unchanged.”

Venezuela’s 2027s ended Monday at 42¾ from 42½ and PDVSA’s 2017s closed at 60½ from 60¼, he said.

“Activity was light for the day, with better sellers seen throughout the session,” he said.

Greek bank gets attention

The market was also paying attention to National Bank of Greece, which recently announced its plan to sell its entire stake in Turkey-based Finansbank AS.

“[Qatar National Bank] is the most likely buyer in this process,” another trader said.

The deal could lead to a ratings upgrade for QNB and “substantial upside” of between 65 bps and 85 bps for holders of Finansbank’s 2017s and 60 bps to 100 bps for its 2019s, he said.

“Contrarily, execution risks could see another buyer stepping in or a further delay in the deal,” he said. “Both might lead to an initial widening in the bonds.”

Dubai bank gives guidance

Commercial Bank of Dubai PSC set initial talk in the mid-swaps plus low-to-mid 200-bps area for a benchmark-sized issue of dollar-denominated notes due in five years (Baa1//A-), a market source said.

Citigroup, ING, JPMorgan and National Bank of Abu Dhabi are the bookrunners for the Regulation S deal, which could price as early as Tuesday.

Bahrain to hit the road

Bahrain will set out on Tuesday for a roadshow to market a possible issue of benchmark-sized and dollar-denominated notes, a market source said.

Bank ABC, BNP Paribas, Citigroup, HSBC and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow will be held in Asia, the Middle East, the United States and the United Kingdom.

Beijing Properties plans notes

China’s Beijing Properties (Holdings) Ltd. is planning a roadshow for a dollar-denominated issue of notes, a market source said.

The roadshow will begin on Tuesday and is being led by Credit Suisse, Guotai Junan International, ICBC International, VTB Capital, Wing Lung Bank, DBS Bank and China Securities International.

A Regulation S deal is expected to follow.

Asset manager to market notes

China Huarong Asset Management Co. Ltd. will embark on a roadshow on Tuesday for a dollar-denominated issue of notes, a market source said.

Credit Suisse, Standard Chartered Bank, Wing Lung Bank and Huarong International Securities are the joint global coordinators, joint lead managers and joint bookrunners. ABC International, CCB International, DBS Bank, Deutsche Bank, Goldman Sachs (Asia), Haitong International, Hani Securities, HSBC, ICBC (Asia), Shanghai Pudong Development Bank and Wells Fargo are joint bookrunners and joint lead managers.

A Regulation S deal is expected to follow the roadshow.

The notes will be part of the company’s $5 billion medium-term note program.

The proceeds will be used for working capital and general corporate purposes, according to a company filing.

The company is a state-owned asset manager based in Beijing.

Stats ChipPAC plans roadshow

Singapore-based Stats ChipPAC Ltd. has mandated Barclays, Deutsche Bank and ING as joint bookrunners to arrange meetings with fixed income investors ahead of a possible dollar-denominated offering of senior notes, according to a market source.

The meetings will start Wednesday in Hong Kong, Thursday in New York and Singapore, Friday in Boston and London, and conclude Monday in Los Angeles.

The semiconductor test and advanced packaging service provider plans to use the proceeds to repay outstanding debt, including borrowings under its $890 million bridge loan facility, entered into on Aug. 6, 2015.

Contour Global holds call

In other news, ContourGlobal Power Holdings SA scheduled an investor conference call for late Monday morning to discuss a $100 million add-on to its 7 1/8% senior secured notes due June 1, 2019, according to an informed source.

Goldman Sachs International is the sole bookrunner for the Rule 144A and Regulation S offer, which is being marketed to both high yield- and emerging markets accounts.

Proceeds, together with cash on the balance sheet, will be used to repay all amounts outstanding under the $150 million senior secured bridge term loan facility.

The issuer, a global developer and operator of wholesale electric power generation businesses, is based in New York.

The original $400 million issue priced in May 2014.

Paul A. Harris contributed to this article.

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