EuroChem, Korea Development price deals; Baidu, Tauron Polska and Lietuvos Energija on tap

By Rebecca Melvin

New York, June 27 – Emerging markets saw more euro- and dollar-denominated deals launch and price on Tuesday, including pricing of EuroChem Group AG’s $500 million of notes due 2021 at par to yield 3.95%.

Trading action in the new EuroChem notes was expected to begin on Wednesday, with no aftermarket dealings seen late Tuesday, a trader source said. The Moscow-based fertilizer company also has existing notes of similar duration and yield.

In dollar-denominated debt, Korea Development Bank priced $300 million of five-year floating-rate green bonds that are earmarked for developing, building or expanding renewable energy facilities.

The Seoul-based lender’s deal is priced via joint bookrunners BofA Merrill Lynch, Credit Agricole CIB and HSBC.

Swire Pacific of Hong Kong also priced $300 million of notes with a 3% coupon and a spread of 105 basis points over seven-year Treasuries.

Meanwhile, two tranches of dollar-denominated senior notes for Baidu Inc. were added to the calendar. The Beijing-based web service company will use proceeds to repay existing debt and for general corporate purposes.

Goldman Sachs (Asia) LLC, JPMorgan and HSBC are joint bookrunners for the deal.

Euro deals added to the calendar included Tauron Polska Energia SA’s €500 million of 10-year fixed-rate bonds and Lithuania’s Lietuvos Energija UAB’s €200 million senior green bonds with a maturity of between seven and 10 years.

The state-owned utility company of Lithuania expects to price its Regulation S bond sometime after June 29. No timing or price information was available on Katowice, Poland-based Tauron, an energy holding company with coal and generation assets.

As for new issuance from corporates going forward, a trader said that now that the end of the second quarter has just about arrived, companies will be going into blackout periods, and not much issuance is expected before September.

Back in established issues, Turkey’s fixed-income space tightened, with the sovereign curve and banks better by about 5 basis points on Tuesday, while corporate issues tightened by 2 to 3 bps, a trader said.

The sovereign notes improved the most for tenors between five and 10 years.

The move represented something of a bounce back from last week when Turkey’s credit came in, the trader said. And they improved despite negative headlines for the region including information from the U.S. Defense Department that it has seen signs that Syria is preparing to use chemical weapons again. The activity was seen at the same Syrian airfield hit by American cruise missiles in April, according to a Pentagon spokesperson.

Meanwhile, the emerging markets trading session was fairly flat and quiet, the trader said.

Market players are “waiting for more clarity from the Fed,” the trader said.

In the last couple of sessions, there has been mild profit taking as investors evaluate positions at the half year mark, but pricing is steady for the most part.

Treasury bonds sold off on Tuesday and yields bounced higher after hitting a 2017 low on Monday. Contributing to Tuesday’s move in bond markets were comments by European Central Bank President Mario Draghi, who hinted that the central bank may start reducing stimulus given improvement in the eurozone economy.

Eurozone, U.S. outlook

The eurozone economy has grown for 16 straight quarters, and employment and consumer confidence have risen.

Concerning the U.S. economic outlook, the International Monetary Fund released preliminary findings after an official visit and said that the real GDP is now 12% higher than its pre-recession peak, job growth has been persistently strong, and, although there are measurement uncertainties, the U.S. economy appears to be back to full employment.

The IMF noted however that the outlook is clouded by “significant medium-term imbalances.” This includes income growth inequities and rising public debt. It also said that the dollar is moderately overvalued by around 10% to 20%.

Commenting on the Trump administration, the IMF noted that although it has prioritized boosting economic and productivity growth, stimulating job creation, encouraging business investment, balancing the budget, bringing down debt and focusing on infrastructure, differences on a range of policies have been found and this has “left open questions as to whether the administration’s proposed policy strategies are best suited to achieve their intended purposes.”

Reforms are need on many fronts, the IMF said, including a more efficient tax system, improved education and developing skills, reprioritizing federal spending, improving the effectiveness of the regulatory system and reforming the immigration and welfare systems.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.