China’s Times Property sells bonds; Bulgaria roadshow ahead; Lat-Am corporates face downgrades

By Christine Van Dusen

Atlanta, March 2 – China’s Times Property Holdings Ltd. sold notes on Monday as Russian bonds opened weaker, following Sunday’s large march through Moscow in memory of the slain opposition politician Boris Nemtsov.

“Unsurprisingly there are plenty of rumors flying around, although the Kremlin has responded by describing it as an attempt to destabilize Russia,” a London-based analyst said. “It’s hard to predict, at this stage, exactly what will happen as a result of his death, but we have already seen comments from Poland’s finance minister, Mateusz Szczurek, for example, that the murder is likely to weigh on the European Union’s decision regarding further sanctions.”

In response to this, as well as news of more fighting in Ukraine, Russian bonds faltered on Monday morning.

“But they have since strengthened,” he said.

Bonds from Central and emerging Europe were mostly strong on Monday morning, the analyst said, as Croatia began its roadshow for new issue of euro-denominated notes.

Investors started selling some Croatia bonds ahead of the new deal, a trader said, with a “great bid” seen for the sovereign’s 2024 notes.

“This morning, Turkey is marginally better, 1 basis points to 2 bps tighter in credit default swaps spreads,” he said. “We saw further political attacks over the weekend from President Erdogan, including an investigation into whether personnel at the Central Bank may be members of the ‘parallel state.’”

Middle East firm, then slow

Notes from the Middle East firmed up at the start of Monday’s session, the analyst said.

“In perpetuals, it’s a mixed bag, with Emirates Islamic Bank and Dubai Islamic Bank both better, but sellers around of other perpetuals,” he said. “High-yield names continue to see buyers.”

But as the session went on, activity was “lackluster,” a London-based trader said.

“The market remains very technical, with buyers of the same bonds versus sellers of the same bonds,” he said. “High-yielders are still ticking along. “

Lat-Am in focus

Looking to Latin America, the session was fairly active, particularly for a Monday, a New York-based trader said.

Sellers were seen for high-grade paper while buyers sought out high-yield bonds, particularly from Mexico, he said.

Meanwhile, volumes for the recent issue from Chile’s Cencosud SA – 5.15% notes due in 2025 that priced at 99.637 to yield Treasuries plus 337.5 bps and 6 5/8% notes due in 2045 priced at 99.909 to yield Treasuries plus 420 bps – saw less volume, and inquiries slowed, he said.

Both issues were off their highs, with bids still strong throughout the curve, he said.

Investors digest news

Bonds from Brazil-based Petroleo Brasileiro SA continued to tighten, moving in about 5 bps from Friday’s close, as investors tried to determine whether Friday’s news of a two-notch downgrade from Moody’s Investors Service had already been priced in.

But overall, volumes were “subdued,” the New York trader said. “Retail continues to buy, and any deep real-money selling seen after the downgrade has waned.”

Pacific Rubiales downgraded

Toronto-based and Colombia-focused Pacific Rubiales Energy Corp. saw its debt ratings downgraded to BB and its outlook revised from stable to negative, a New York-based trader said.

The downgrade reflects the negative impact of declining oil prices, which could hurt medium- and long-term production, the ratings agency said. That could force the company to reduce capital expenditures.

Asian bonds firm

Asian credits were firm on Monday morning after the People’s Bank China’s rate cut, a London-based trader said.

“China and India high-grade cash bonds closed unchanged to 3 bps tighter while Korea was broadly unchanged after North Korea fired two missiles into the sea in protest of U.S. military drills,” he said. “The rest of the sectors closed unchanged.”

Oil companies from China were 2 bps to 5 bps tighter and property companies closed up ¼ point to ½ point, he said.

The new issue of 7½% notes due 2020 that Country Garden Holdings Co. Ltd. priced last week at par traded up at 100¾ on Monday before closing at 100¾ bid, 101 offered, he said.

“High-yield sovereigns bounced back, along with U.S. Treasuries,” he said. “Long-end Philippines closed ¼ point higher while Indonesia closed ½ point higher. Both bellies were unchanged.”

Times Property prints notes

In its new deal, China-based property developer Times Property priced $280 million 11.45% notes due in 2020 at 99.35 to yield 11 5/8%, a market source said.

The notes were talked at a yield in the 11 7/8% area.

Bank of China International, Haitong International and UBS were the bookrunners for the Regulation S deal.

Bulgaria sets roadshow

Bulgaria will set out on March 16 for a roadshow to market a euro-denominated issue of notes, a market source said.

The sovereign previously mandated Citigroup, HSBC, Societe Generale CIB and Unicredit as the bookrunners for a €3 billion notes program.

Other details were not immediately available on Monday.

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