Lietuvos Energija prices €300 million green bonds; market quiet but firmer before holiday

Rebecca Melvin

New York, July 3 – Lietuvos Energija UAB, the state-owned Lithuanian utility, launched and priced €300 million 1 7/8% 10-year green bonds on Tuesday, riding the session’s firmer market tone as a number of cross currents influenced investors.

The Vilnius-based company’s new issue – its second green bond – priced at a solid new issue premium to the Lithuania sovereign, according to a market source.

But the session was pretty quiet otherwise ahead of an early market close in the United States for the country’s Independence Day holiday. U.S. financial markets will remain shut on Wednesday in observance of the holiday.

“I don’t think we are going to hear anything until Thursday at the earliest,” a New York-based market source said, regarding new issues in the primary market and notable trends in the secondary. But he added that valuation was somewhat improved, although it pulled back slightly into the market close in New York.

Higher oil was a factor in the early going, running up to $75 per barrel for the West Texas Intermediate front month on Tuesday amid emerging supply concerns. But prices pulled back from the peak and ended down by 1% on the day.

Contributing to the oil price rise are output disruptions hitting Libya and Canada on the heels of restricted output from Saudi Arabia and Russia under production caps in place since 2016, as well as lower output from Venezuela, increased global consumption and fears about Iranian oil output coming under fire if U.S. sanctions kick in. Lower crude inventories are expected to be reflected in U.S. data this week.

The Organization of Petroleum Exporting Countries agreed on June 22 to raise output to meet production caps set in 2016. But it was not known if Saudi Arabia and Russia would provide supply uplift in the medium term related to the deal despite calls from U.S. President Donald Trump that OPEC raise production in order to lower gas prices at the pump in the United States.

The price for August WTI crude fell by 72 cents, or 1%, to $73.22 on the New York Mercantile Exchange. Brent crude ended higher by 15 cents, or 0.2%, to $77.45 per barrel on London’s ICE futures exchange. But earlier Brent was as high as $78.55 per barrel.

Although trade risk concerns took a back seat on Tuesday, the market is still concerned about the weaker yuan. The yuan fell 4% in the month of June, and on Tuesday China’s central-bank posted a release pledging to keep the yuan’s exchange rate “basically stable at a reasonable and balanced level.

The yuan had been down as much as 1.1% on the day, hitting its lowest intraday level since Aug. 7, before recovering to close lower by 0.3%, with the dollar buying 6.67 yuan. Other currencies were near levels that represent their worst for the year, including the Argentine peso which stood at 28.10 to the dollar and the Brazilian real, which was at 3.90 per dollar.

Mexico’s bonds improved in tandem with a somewhat stronger Mexican peso as the market continued to adjust to the victory of Andres Manuel Lopez Obrador, or AMLO, of the National Regeneration Movement, in the country’s presidential election Sunday. The new president-elect will take office on Dec. 1.

Petroleos Mexicanos SAB de CV’s 2027 bonds were higher by about a point at 102ish, according to Trace data.

Looking ahead, the market will watch the release on Thursday of the minutes from the Federal Open Market Committee’s June meeting to provide further indications on the pace of U.S. monetary tightening.

© 2015 Prospect News.
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