Issues from Egypt, Latam Airlines on volatile day for EM; China’s Bluestar re-prices deal

By Christine Van Dusen

Atlanta, June 4 – Egypt and Chile’s Latam Airlines Group SA sold notes – and China National Bluestar Group Co. Ltd. re-priced an earlier deal – on Thursday as emerging markets assets traded at the mercy of U.S. Treasury moves.

The morning’s Treasury moves were, for investors, “a little painful,” a London-based trader said. “But what’s very impressive for an asset class that sometimes has been known to throw in the towel at the first sign of pressure is the lack of panic selling. This makes me think the ‘buy the dip’ mantra is still being chanted.”

Asian bonds closed their session firm, with high-grade cash notes finishing unchanged to a couple of basis points tighter, another London-based trader said.

“New issues performed well on the back of real-money buying,” he said. “Names remain in demand, but some accounts are hesitant to pick them up, given how tight spreads are.”

Financial company bonds were weaker on Thursday, he said.

“In Korea, the 10-year bucket was 2 bps to 4 bps tighter,” he said. “India closed broadly unchanged.”

The new 4.37% notes due 2025 that India’s Bharti Airtel Ltd. priced at a spread of 210 bps over Treasuries traded between 211 bps and 204 bps, then hit 208 bps before closing at 209 bps bid, 206 bps offered.

From Latin America, most bonds saw wider spreads and a risk-off tone amid volatility, a New York-based trader said, and high-yield was particularly weak.

Lat-Am in focus

Five-year credit default swaps spreads for Brazil closed Thursday at 245 bps from 238 bps while Mexico’s moved to 127 bps from 123 bps.

Still, cash prices managed to close unchanged to slightly lower as global rates started to rally from the high yields seen overnight, the New York trader said, and good two-way volumes were seen ahead of new economic data from the United States.

The 2027 bonds from Venezuela closed Thursday at 43, versus 43.65 on Wednesday, and PDVSA’s 2017s moved from 73.25 to close at 72.85.

Woori Bank notes dip

The new issue of notes from Korea’s Woori Bank – 5% Basel III tier 1 notes due in 2045 that priced on Wednesday at par – fell to 99.25 and hit a low of 99 before seeing some demand on Thursday, a London-based trader said.

The notes were talked at a yield in the 5% area.

BofA Merrill Lynch, Barclays, Citigroup, Commerzbank and Nomura Securities were the bookrunners for the Rule 144A and Regulation S deal.

“London came in with a bit of selling, and the bonds marked the new low of 98 3/4, then closed at 98 5/8 bid, 98 7/8 offered,” he said.

The notes closed at 98 5/8 bid 98 7/8 offered.

Latvenergo draws some orders

Latvia-based power supply merchant Latvenergo AS’ new upsized €75 million 1.9% green bonds due 2022 that priced Wednesday at €998.572 to yield 1.922% drew a final order book of about €87.05 million, the company said in an announcement.

SEB was the sole bookrunner for the deal, which was initially expected to total €50 million.

The company previously announced plans to issue up to €100 million of green bonds to finance the implementation of environmentally friendly projects, making Latvenergo the first state-owned company in Eastern Europe to enter the capital market with green securities.

Latvenergo has developed and approved its Green Bond Framework, and the company’s environmental objectives have been assessed by the Center for International Climate and Environmental Research – Oslo.

The deal received orders from 25 investors from Latvia, Lithuania, Germany, Austria and Finland.

Egypt does deal

In its new deal, Egypt printed a $1.5 billion issue of notes due in 2025 at a yield of 6%, a market source said.

The notes were talked at a yield of 6¼%.

“That initial price guidance of 6¼% looks good to me, especially as they are pricing on yield on a weak U.S. Treasury day,” a trader said before the pricing.

BNP Paribas, Citigroup, JPMorgan, Morgan Stanley and Natixis Securities were the bookrunners for the Rule 144A and Regulation S deal.

Bluestar re-prices deal

Chaoyang-based chemical product manufacturer China National Bluestar re-priced a two-tranche $1 billion issue of notes due June 11, 2018 and 2020 due to a “contractual oversight,” a market source said.

The $500 million 3½% notes due in 2018 that had priced at a spread of Treasuries plus 220 bps re-priced at 99.893 to yield 3.538%, or Treasuries plus 250 bps.

The $500 million 4 3/8% notes due in 2020 that priced at Treasuries plus 235 bps re-priced at par to yield 4 3/8%, or Treasuries plus 270 bps.

Deutsche Bank, Morgan Stanley and BOC International were the joint global coordinators and – along with JPMorgan and BNP Paribas – the joint bookrunners and joint lead managers for the Regulation S deal.

Latam Airlines sells bonds

Chile’s Latam Airlines Group priced $500 million 7¼% notes due June 9, 2020 at par to yield 7¼%, a market source said.

The notes were talked at a yield in the 7¼% area.

Citigroup and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to fund the company’s outstanding 9½% notes due 2020.

The airline is based in Santiago.

© 2015 Prospect News.
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