Issuance from Sharjah; economic data eyed; Brazil votes to impeach; Turkey underperforms

By Christine Van Dusen

Atlanta, Sept. 1 – The Emirate of Sharjah sold notes on Thursday as investors digested recent economic data – including Wednesday’s release of slightly better-than-expected private employment data from the United States – and awaited Friday’s jobs report.

“The key event will undoubtedly be tomorrow’s nonfarm payrolls for August,” a London-based analyst said.

Looking to Brazil, the Senate voted to impeach President Dilma Rousseff and remove her from office.

“For now, investors attention shifts from the impeachment saga to [her replacement, former Vice President Michel Temer’s] ability to implement fiscal adjustment that is crucial for the Brazilian financial health,” according to a report from Schildershoven Finance BV. “His inability to implement unpopular structural reforms may trigger a substantial risk-off in the Latin American capital market.”

From Turkey, the curve continued to underperform, widening 5 basis points to 7 bps into the European close, a trader said.

“The Street hit the curve down early in the day, with the 2026s and 2045s hit,” he said. “Client activity was low but started the session with better sellers for choice. The spread-widening was Street-driven but this has brought some buyers into the close from the United States.”

Local investors also “joined the bid” after profit-taking for the past few weeks, he said.

“The curve remains steep, with buyers in the 2021s and 2023s,” he said. “Spreads in cash are only 15 bps from the wides, post-coup and S&P action, in the long end and 20 bps in the mid-curve.”

Banks and corporates from Turkey saw two-way activity, but valuations are tight versus the sovereign curve, he said.

“So if there are sellers, bid liquidity will be thin from the Street, given there is nowhere to place rich bonds, apart from the balance sheet,” he said.

Russian numbers improve

From Russia, manufacturing improved in August, with new orders rising from July’s levels, according to a report from Schildershoven Finance.

“This announcement is a slight positive for the market, as this indicates the end of recession in the country,” the report said. “At the same time, yields in Russian bond market look relatively low. We do not expect a substantial market growth without a material oil price rebound.”

China releases data

China also released decent manufacturing data but included figures that showed that production and new orders increased at a slower pace while exports and jobs fell, “indicating weakness underneath the positive headline figures,” the Schildershoven report said.

“The data is unlikely to affect Chinese corporate dollar bonds. Investors are searching for yields and demand for bonds will probably remain strong, but the credit risks associated with the Chinese high yield bonds remain intact as the macroeconomic situation has little changed over the past month.”

Sharjah sells notes

In its new deal, Sharjah priced $500 million 3.084% notes due Sept. 8, 2021 at par to yield 3.084%, or mid-swaps plus 185 bps, a syndicate source said.

Initial talk was set in the mid-swaps plus 205 bps area before landing in the 190 bps area.

HSBC, Citigroup, Standard Chartered, Emirates NBD, First Gulf Bank, Dubai Islamic Bank, Kuwait Finance House and Bank ABC were the bookrunners for the Regulation S deal.

© 2015 Prospect News.
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