Petrobras slips with oil, Senate vote; Cyprus prices notes; Qatar struggles with sanctions

By Rebecca Melvin and Colin Hanner

New York, June 20 – Another drop in global oil prices was a focus in emerging markets on Tuesday. But as oil slipped into bear market territory amid concerns about a global oil glut, it was not the only culprit for market weakness, sources said.

In Brazil, the Senate rejection of a labor bill added to pressure on Brazilian assets, a New York-based economist said.

Petroleo Brasileiro SA’s 6.85% notes due 2115 – its 100-year bond – was down to 86.95 on Tuesday, compared to 87.75 on Monday. The yield is still below 8%, the economist noted.

Petrobras’ 7 3/8% notes due 2027 were last seen at 105.65, which was down from 106.6 bid, 106.77 offered on Monday.

Crude oil prices slipped into bear market territory for the first time since August 2016, which was before the Organization of the Petroleum Exporting Countries agreed to production cuts at the end of last year.

Light sweet crude for July delivery settled down 97 cents, or 2.2%, at $43.23 a barrel on the New York Mercantile Exchange, which is more than 20% below this year’s Feb. 23 high of $54.45. Brent crude oil fell 89 cents, or 1.9%, to $46.02 a barrel.

Earlier in emerging markets, sovereign issuers were taking the bulk of attention with Cyprus and Russia expected to come to market, market sources said.

Cyprus priced €850 million of 2¾% seven-year notes at 99.686 to yield 2.8%. Concurrently, Cypress is tendering for a maximum of €514.9 million of existing notes in three series, including its 2019 notes and its February and May 2020 notes.

The new notes (expected ratings: B1/BB+) will settle on June 27.

Citigroup Global Markets Ltd., Goldman Sachs International and HSBC Bank plc were joint lead managers for the deal.

In the corporate new issue space, South Africa mining company Sibanye Gold Ltd. priced $1.05 billion of bonds (Ba2/B+) in two tranches.

The issuance included $500 million of 6 1/8% five-year notes that priced at 98.94 to yield 6 3/8%.

Sibanye Gold also sold $550 million of 7 1/8% eight-year notes at 98.509 for a yield of 7 3/8%.

Citi, HSBC and Barclays are the global coordinators and bookrunners for the deal. Credit Suisse and Standard Bank are also bookrunners.

Proceeds of the issue will be used to refinance part of the bridge loan facility obtained by Sibanye to finance the purchase of Stillwater Mining Co.

Also in corporate action, Turkiye Is Bankasi AS (Isbank) was expected offer a dollar-denominated benchmark Rule 144A and Regulation S tier 2 offering (B1//BB) of notes following a morning investor call on Tuesday.

In April, Isbank priced $750 million seven-year notes (Ba1//BB+) at par to yield 6 1/8%, a deal that was upsized from $500 million and was overbooked at $1.9 billion, Prospect News reported.

A market source said comps for the new issue are the bank’s 2024 notes at z-spread plus 372 basis points, Isbank’s 2022 notes – a $600 million deal that priced last October at par to yield 5½% – at z-spread plus 342 bps and recent seven-year notes from Yapi ve Kredi Bankasi AS (Yapi Kredi) at z-spread plus 384 bps.

In the Middle East, developments continued to unfurl in and around Qatar, though comments from all sides “have likely rather complicated the situation and point towards a longer stand-off,” a market source said.

The source continued, adding that while Qatar’s finance minister signaled a willingness to talk about the current sanctions with other countries, the United Arab Emirates’ counterpart said that isolation could persist if Qatar continued to support a “perverted view of what their political role is.”

© 2015 Prospect News.
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