Issuance from Indonesia’s Solusi; response to Greece news muted; Ukraine sets ceasefire

By Christine Van Dusen

Atlanta, Feb. 12 – Indonesia’s PT Solusi Tanas sold notes on Thursday as Ukraine set a ceasefire and Greece’s prime minister met with European leaders after they failed to agree on a bailout strategy.

The ceasefire is expected to begin on Sunday and includes the withdrawal of heavy weapons and foreign troops from Ukraine, with no autonomy for the Donbass region and some agreements on reforms to Ukraine’s constitution. The parties also agreed to continue to talk about gas supplies.

“So overall, positive, with Russian credit default swaps spreads over 25 basis points tighter currently,” a London-based trader said. “No major surprises, but I suppose we’ll now see how successfully followed the deal is. One area of concern immediately is the apparent refusal to give the Donbass region autonomy. That may well prevent any sort of long-lasting peace in the region.”

The market’s response to this news, as well as the headlines from Greece, was muted, another trader said.

“Asian credits shrugged off Greece headlines, with high-grade cash closing 1 bp to 3 bps tighter,” he said. “China outperformed the rest of the sectors, with financials 1 bp to 3 bps tighter.”

China-based Tencent Holdings Ltd.’s new 3.8% notes due in 2025 that priced at 99.605 traded up on Thursday, he said.

Also on Thursday, Turkish credit default swaps spreads opened 2 bps tighter and bonds from Central and emerging Europe were slightly wider on the U.S. rates move, a London-based analyst said.

“But euro paper is seeing buyers, despite the Greece news,” he said.

Bonds from the Middle East were mostly flat on Thursday morning, following some pressure on high-yield names on Wednesday, a trader said.

In deal-related news, the Ivory Coast has planned a roadshow. And market sources were whispering about the upcoming issue of euro-denominated notes from Croatia, which could come to the market in March via Barclays, Erste Group, JPMorgan and UniCredit.

Chinese corporates in focus

Among high-yield names in Asia, Chinese property companies saw their bonds close 1/8 point to 3/8 point lower on news that Kaisa Group Holdings Ltd. will need to restructure its debt, a trader said.

“The Kaisa complex initially was down 7 points with good two-way flow in the low-60s,” he said.

In sympathy, China-based Evergrande Real Estate Group Ltd.’s new 12% notes due 2020 that priced Tuesday at par and closed Wednesday at 99½ bid, 99 7/8 offered traded down at 99 3/8, he said.

Asian sovereigns stabilize

Meanwhile, some Asian sovereigns stabilized, with the Philippines’ long end about a ¼ point higher and the Indonesia curve unchanged on Thursday.

“Korea was generally unchanged, but onshore was still in ‘buy mode’ ahead of new year holidays,” he said. “India closed another 5 bps to 10 bps tighter.”

Bendine boosts Petrobras bonds

From Latin America, bonds from Brazil-based Petroleo Brasileiro SA were stronger after new chief executive officer Aldemir Bendine focused on the potential rise in output while questioning the size of the company’s losses from a corruption scandal, a New York-based trader said.

The market seemed to be warming up to Bendine for this and for his investment plan reduction, he said.

Bonds were between 17 bps and 23 bps tighter on Thursday morning, he said.

Petrobras tightens

Petrobras’ bonds continued to tighten into the close on Thursday, the New York trader said, as clients became better buyers throughout the session.

The 2024s finished the day 30 bps tighter while the long end narrowed 15 bps, he said.

Chile-based Cencosud SA’s new issues – 5.15% notes due in 2025 that priced at 99.637 and

6 5/8% notes due in 2045 that priced at 99.909 – also pushed higher and saw buying, he said.

Other bonds from Chile, as well as Mexico and Peru, were very quiet, he said.

Middle Eastern bonds active

Taking a closer look at the Middle East, bonds put in an active day and saw some selling on the move in U.S. Treasuries, a London-based trader said.

“DP World still has some residual paper lying around, closing at 115 1/8 mid,” he said. “Saudi Electricity Co. has paper around, and Qatar moved lower, but it’s holding on a spread basis.”

Names from Kuwait saw two-way activity, with Burgan Bank SAK’s perpetual notes that priced at par trading at 97 bid, 97 5/8 offered.

Abu Dhabi Islamic Bank PJSC’s perpetuals were heavy, with some paper around, he said.

“Supply-wise, it remains the same story,” he said. “Huge negative net issuance dynamic.”

Solusi prints notes

In its new deal, Jakarta-based telecom tower operator and owner Solusi priced a $300 million issue of five-year notes at 6¼%, a syndicate source said.

BNP Paribas, ING, JPMorgan, Standard Chartered Bank and HSBC were the bookrunners for the Regulation S deal.

The proceeds will be used for refinancing existing indebtedness.

Other details were not immediately available on Thursday.

Roadshow for Ivory Coast

Ivory Coast will set out on Feb. 16 for a roadshow to market a possible issue of notes, a market source said.

The roadshow will run until Feb. 25.

BNP Paribas, Citigroup and Deutsche Bank are the bookrunners for the deal.

Buenos Aires draws orders

The new deal from the City of Buenos Aires – $500 million six-year notes that priced at par to yield 8.95% – drew a final book of about $2 billion from more than 140 investors, a market source said.

About 78% of the orders came from the United States, 18% from Europe and 4% from Latin America, with fund managers picking up 76%, hedge funds 17% and private banks 7%.

The proceeds will be used for debt refinancing.

BofA Merrill Lynch, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

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