Bahrain announces new deal; ADCB launches, Sigma, Baidu price as trade talk roils market

By Rebecca Melvin

New York, March 22 – Emerging markets on Thursday saw a number of deals on the calendar move toward pricing or price, and Bahrain announced a multi-tranche dollar benchmark deal, but secondary market spreads widened out significantly amid a strong risk-off wave that sent stocks, Treasury yields, and oil lower and gold higher on the day.

The Dow Jones industrial average fell 724.42 points, or 2.9%, to 23,957.89. The catalyst for the downdraft was fear about U.S. trade policy, sources said. The Trump administration announced that it plans to impose tariffs on tens of billions of dollars of Chinese imports.

At the outset of the New York session, “futures were down but sentiment was good on the back of the FOMC,” a New York-based market source said. “The tariffs/trade war news throughout the day weighed on the market.”

Activity in the primary market had resumed after the U.S. Federal Open Market Committee concluded a two-day policy meeting with a 25-basis-point interest rate increase and showed an expected pick up in the pace of increases in 2019 and 2020.

Most of the primary market activity had been on pause ahead of the news. Abu Dhabi Commercial Bank PJSC launched a larger than initially talked $750 million of five-year notes to yield 130 bps over mid-swaps.

The deal, for which roadshow meetings wrapped up in London on Monday, was pricing tight compared to guidance and initial talk of mid-swaps plus 130 bps to 135 bps and mid-swaps plus 145 bps, respectively.

Beijing-based web services company Baidu Inc. priced $1.5 billion in two tranches of notes due in five and 10 years, including $1 billion of 3 7/8% notes due 2023 priced at 99.902 to yield 3.895%, or a yield spread of U.S. Treasuries plus 125 bps; and $500 million of 4 3/8% notes due 2028 priced at 99.432 to yield 4.446% or a spread of Treasuries plus 160 bps.

And Sigma Alimentos SA de CV priced $500 million 4 7/8% senior notes due 2028 at 99.336 to yield 4.96%, or a yield spread of U.S. Treasuries plus 212.5 bps. The branded foods producer and distributor is based in Monterrey, Mexico.

Given the market tone, deals came at less aggressive terms. The Sigma deal moved only 125 bps from initial price talk, a market source noted.

New to the calendar was Bahrain, which announced it has mandated banks and scheduled a roadshow for a multi-tranche dollar-denominated benchmark offering of notes, including a seven-year sukuk and 12- and/or 30-year bonds.

The sovereign selected BNP Paribas, Citigroup, Gulf International Bank, National Bank of Bahrain and Standard Chartered to arrange the roadshow meetings for the Rule 144A and Regulation S transaction.

Meanwhile, Ukraine’s agro-industrial MHP SE group was talking a new dollar-denominated eight-year bullet note to yield 7¼% to 7 3/8%, with proceeds of the offering earmarked to finance the tender of its $495.6 million of 8¼% notes due 2020.

And Globalworth Real Estate Investments Ltd. guided pricing of its euro-denominated seven-year notes to yield within the range of 3 1/8% to 3¼%. The guidance was tightened from initial talk in the area of 3 3/8%, and order books stood in excess of €1.3 billion ahead of deal launch.

The Guernsey-based real estate investment trust focuses on properties located in Poland and Romania.

Remaining proceeds will be used for short-term debt financing, general corporate purposes and to finance expansion and diversification of the group’s businesses.

The issuer is based in Kiev, Ukraine.

© 2015 Prospect News.
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