End of year illiquidity in the market is also exacerbating premature closure — African credits were down around a point on the day yesterday and many others remain struggling having been pushed down even further — Kazakhstan’s 2044s are now trading around a cash price of 83.5 having been priced only this Autumn.
Most bankers are already looking forward to next year’s supply and the rally that European quantitative easing could bring. In the meantime, all eyes are on Ukraine as the IMF warned that the country’s bailout is at risk of collapse.
Hopes for some LatAm new issues to lift this year's record volumes to even greater heights look to be slim after Brazil's Cosan cancelled its planned liability management transaction on Monday and disruption from falling oil prices and the Petrobras corruption investigation hits LatAm. Argentina's YPF has mandated for a tap of its 2024s that was unofficially expected this week, but conditions are hardly conducive to one an oil and gas borrower, let alone when it is of LatAm's lowest rated credits. More opportunistic issuers that may have considered approaching the market before year-end are unlikely to find conditions to their liking.
Attentions instead has turned to Venezuela, whose bonds suffered the worst session of trading many market participants could imagine on Tuesday. With 97% of Venezuela's dollar revenues coming from oil mean that lower prices are raising serious concerns about the country's already strained balance of payments. A default is more than priced into the market, and analysts are looking at next October's spike in due debt payments as a potential crunch moment.
In the loans market, Kazakhstan — one of the hotly tipped areas for new business in 2015 — is seeing some end of year activity. A number of borrowers are rumoured to be in discussion with banks, but state owned oil company KazMunaiGas is looking to close a loan of as much as $600m through its operating subsidiary Urikhtau before the end of the year. Citi and SMBC are the leads for the loan, which is guaranteed by KMG.
In Africa, various deals are close to signing and mobile telecommunications infrastructure firm IHS Towers has launched an $800m loan into the market. IHS, which is headquartered in Nigeria, hopes to complete the senior phase of the loan before the end of the year.
Africa Finance Corporation is set to close a $300m loan as early as Tuesday, while South Africa’s Standard Bank is due to sign $700m by Wednesday. Other deals for Fidelity and Zenith Bank are expected to wrap up by next week.
Francesca Young +44027 779 7313
Virginia Furness +44207 779 8299
Dan Alderson +44207 779 7311
Steve Gilmore +44207 779 8297
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