Commercial Bank of Qatar on roadshow; Brazil’s CDS widen, Mexico’s flat; new Qatar deal trades

By Christine Van Dusen

Atlanta, May 31 – Commercial Bank of Qatar QSC was on a roadshow for a new issue of notes on a quiet post-holiday Tuesday for emerging markets assets that saw mixed performance for many Latin American names.

“The overall risk-on tone is barely lingering, as we see a lot of what looks to be range trading in a number of credits,” a New York-based trader said.

He pointed to Colombia’s Ecopetrol SA and Brazil’s Braskem SA, as well some Mexican corporates and banks.

Mexico-based Cemex SAB de CV was a “standout,” he said, “as the curve is seeing nice gains on evenly mixed inquiry from accounts the last two to three days.”

The company’s 2022s lagged a bit, but “not markedly,” he said.

Brazil-based Vale SA, meanwhile, was unable to move higher after pushing up last week, he said.

“It has no giddy-up to it whatsoever right now,” he said. “Same with Ecopetrol – light institutional inquiry, coupled with an almost complacent feel, usually means we’re headed a bit lower. But they have traded quite resiliently through the recent, short periods of overall Latin American malaise.”

At the end of the day, Latin American credit remained mixed, with Brazil underperforming and Mexico outperforming, another trader said.

Brazil’s five-year credit default swaps spread finished at 365 basis points, about 15 bps wider, while Mexico’s were mostly unchanged at 172 bps.

“Cash prices finish mostly unchanged on balance, depending on the name,” he said. “Brazil cash does get hit into the close, with prices off 1 point to 1¼ points on the day.”

High-yield names from Latin America continued to “see weaknesss,” particularly for Venezuela.

“Flows are on the lighter side for month-end, with two-way inquiries,” he said.

Investors seek safety

Overall, investors appear to be looking for safe bets, a London-based trader said.

“I get the feeling some investors are already looking for the ‘safe’ carry trades to get them through the lull,” he said. “When you think Ramadan starts on the June 6, it’s not such a surprise.”

What qualifies as “safe,” he said, are emerging markets bonds in the investment-grade space, particularly those with a five-year tenor.

“Minimal headline risk would be nice, but in EM that’s not easy, so no new headline risk is more appropriate,” he said.

Good volumes for Qatar

The new issue of notes from Qatar – $9 billion due June 2, 2021, 2026 and 2046 – received some attention on Tuesday.

The sovereign’s $3.5 billion 2 3/8% five-year notes priced at 98.924 to yield Treasuries plus 120 bps after talk in the 125 bps area.

The $3.5 billion 3¼% 10-year notes priced at 98.963 to yield 150 bps after talk in the 155 bps area.

And the $2 billion 4 5/8% 30-year notes priced at 97.606 to yield 210 bps after talk in the 215 bps area.

“Looks to have been digested for now, as good volumes trade in the 2021 and 2026 on tight bid offers,” a trader said.

HSBC, JPMorgan, MUFG and QNB Capital were the joint global coordinators and – along with al khaliji, Barclays, BofA Merrill Lynch, Deutsche Bank, Mizuho Securities and SMBC Nikko – the joint lead managers and joint bookrunners for the Rule 144A and Regulation S deal.

CBQ on roadshow

In deal-related news, Commercial Bank of Qatar is on a roadshow for a dollar-denominated issue of notes, according to a company announcement.

Citigroup, HSBC, Morgan Stanley and National Bank of Abu Dhabi are the bookrunners for the Regulation S deal.

The roadshow began on Monday and will be held in Asia, the Middle East and Europe.

The bank provides retail and wholesale banking services and is based in Doha.

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