Primary hosts China’s Agricultural Bank, Minsheng Banking; Treasuries give support to EM

By Christine Van Dusen

Atlanta, May 15 – Beijing-based Agricultural Bank of China Ltd., Ecuador and China Minsheng Banking Corp. Ltd. sold notes on Friday as many bonds remained firm – with some Latin American paper reaching its best levels of the week – amid support by the latest moves in U.S. Treasuries and a positive equities backdrop.

Still, activity was somewhat quiet, a New York-based trader said.

Brazil’s five-year credit default swaps spreads traded at 229 basis points from 230 bps, while Mexico’s five-year notes were unchanged, he said, but Venezuela and PDVSA were slightly weaker.

Venezuela’s 2027s traded at 50.40 from 51.30 on Thursday, while PDVSA 2017s closed at 76.30 from 77.50.

“Seems we are trying to establish where cash prices should be trading with the big overnight move in rates,” he said.

From the Middle East, the new issue of notes from Dubai-based DP World “got some traction,” a London-based trader said.

The 3¼% notes due 2020 priced at 99.835 to yield mid-swaps plus 155 bps via Barclays, Citigroup, Deutsche Bank, Emirates NBD Capital, HSBC, National Bank of Abu Dhabi and Societe Generale CIB in a Rule 144A and Regulation S deal.

Looking to Asia, high-grade cash bonds were seen moving 1 bp to 3 bps tighter on Friday morning, with real-money demand remaining strong.

China-based Huawei Technologies Co. Ltd.’s 4 1/8% notes due 2025 that priced at 99.060 to yield Treasuries plus 195 bps traded up on Friday at 171 bps before closing at 171 bps bid, 168 bps offered, a trader said.

Recent issue tightens

In other trading from Asia, China General Nuclear Power Corp.’s new 4¼% notes due 2025 that priced at a spread of 177.5 bps were 5 bps tighter, at 164 bps bid, 161 bps offered.

“Korea and Malaysia spreads were a touch tighter, but not in focus, while India closed unchanged,” the trader said.

Kaisa in focus

China’s Kaisa Group Holdings Ltd. again made headlines, this time after Sunac China Holdings Ltd. might raise its offer for Kaisa in a debt restructuring deal.

The majority of the members of the creditors committee are backing this proposal, according to a report from Schildershoven Finance BV.

“Kaisa’s eurobonds rose on the news by 2 cents to 3 cents on the dollar,” the report said.

Prices move higher

By the end of the session, Latin American cash prices had chased Treasuries higher, another New York trader said.

“Argentina finishes the day virtually unchanged, with a few Street trades,” he said. “Flows were on the lighter side, with better sellers from the inquiries we saw. Low-beta spreads remain relatively stable, but it remains to be seen if rate volatility can subside and cash prices can start to consolidate and establish a range.”

Latin American corporates traded “mostly sideways” on Friday, “but overall the tone felt better again today, with stronger bids and more buyers surfacing,” another trader said.

Pacific Rubiales bonds dip

Toronto-based and Colombia-focused Pacific Rubiales Energy Corp. saw its bonds move lower as concern increased about the closing of the buyout by Mexico-based Alfa SAB de CV and Harbour Energy Ltd.

This week the company released slightly weaker-than-expected earnings results. And a Spanish billionaire recently joined a group of Venezuelan investors that oppose the size of the Alfa-Harbour takeover bid.

“There are some possible kinks in the armor,” he said, “and the underwhelming first-quarter 2015 results are not helping either.”

ABC sells bonds

In its new deal, Agricultural Bank of China priced a $1.5 billion triple-tranche issue of three- and five-year notes, a market source said.

The deal included $500 million notes due May 21, 2018 that priced at Treasuries plus 115 bps.

The $250 million floating-rate notes due May 21, 2018 priced at par to yield Libor plus 91 bps.

And the $500 million notes due May 21, 2020 priced at a spread of Treasuries plus 130 bps.

Citigroup, ABC International, BofA Merrill Lynch and Wells Fargo Securities were the bookrunners for the deal.

“Most of the trading was concentrated in the morning session, with the five-year tranche the most active,” a trader said. “The bonds traded up at 120 bps and touched tights of 114 bps, then closed 115 bps bid, 112 bps offered, with accounts topping up poor allocations.”

Ecuador prices tap

Ecuador priced a $750 million tap of its 10½% notes due March 24, 2020 to yield 10½%, a market source said.

Citigroup was the bookrunner for the Rule 144A and Regulation S deal.

The original issue of $750 million priced at par to yield 10½%.

China Minsheng prints notes

China Minsheng Banking priced $600 million 2¼% notes due in 2018 at a spread of 145 bps over Treasuries, matching talk, a market source said.

UBS, Citigroup, HSBC and CMBC Hong Kong are the joint global coordinators and – along with Barclays, China Construction Bank, Agricultural Bank of China, Bocom Hong Kong Branch, Deutsche Bank and Jefferies – were the bookrunners for the Regulation S deal.

“Stellar performance, with bonds 15 bps tighter, wrapped around 165 bps for the day to close at 166 bps bid, 163 bps offered,” a trader said.

Albania seeks issuance

In other news, Albania is looking to issue €300 million of bonds on the international markets, a market source said.

The sovereign previously delayed a dollar-denominated eurobond issue that was expected to come to market in May of 2010 via JPMorgan and Deutsche Bank due to market conditions.

That deal was expected to total between $300 million and $400 million.

Other details on the new deal were not immediately available on Friday.

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