Morning Commentary: Energo-Pro announces deal; secondary tone positive on softening of sanctions

By Rebecca Melvin

New York, April 23 – Energo-Pro a.s. joined Nitrogenmuvek ZRT on the Emerging Europe new issue calendar on Monday, with plans for a €250 million offering of six-year notes expected to price at mid-week.

The deal for the Prague, Czech Republic, power generation company will price ahead of Nitrogenmuvek ZRT, which has been on the calendar for longer with a €200 million offering of seven-year notes, slated to price next week.

The deals are both smaller than typical benchmark size and are based on funding needs, a London-based market source said. “But they may get pushback from investors,” who feel they need more liquidity afforded by bigger deal size.

The Middle East and Africa regions were quiet on Monday, but there are deals in the pipeline that may come to light soon, the source said.

In the secondary market, market tone was more positive on Monday, which was attributed to softening of U.S. sanctions against Russia’s United Co. Rusal plc. The Rusal bonds themselves improved quite a bit and had a cheering effect on the market in general. Other commodity-related paper also improved.

Rusal’s newer 4.85% notes due 2023 were seen at 40 bid on Monday compared to trades at 28 on Friday. The bid-ask spread was wide at 40 bid, 60 offered, so the company is not “out of the woods,” but it’s significantly better than were it was, the market source said.

The U.S. Treasury Department on Monday softened its sanctions against Rusal, which was among a number of Russian companies and individuals that were sanctioned earlier this month, saying that Americans now have until Oct. 23 to wind down their business dealings with Rusal. The previous deadline was June 7. The Treasury also said it would not impose secondary sanctions on non-U.S. entities engaged with Rusal or its subsidiaries.

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