US dollar 8% senior bonds due 2022. It paid
US$12.556m for the notes, including
accrued interest. In December it purchased
US$16.061m in principal amount of its
2022s, paying a total of US$10.72m.
Following the repurchases, it has
US$189.139m in principal amount
outstanding.
Moody’s this month cut Geo Energy’s
rating to Caa1 from B3, with a negative
outlook, due to increasing uncertainty
about whether the company can increase
ITSûCOALûRESERVESûSUFlCIENTLYûTOûAVOIDû
triggering the early redemption of its
bonds.
The company’s proposed acquisition of
Titan Global Energy has been put on hold.
Under the terms of the bonds, if it does
not increase its coal reserves substantially
by April 2021, a target it would achieve
with the proposed acquisition, Geo
Energy would be required to redeem the
bonds early.
S&P and Fitch both rate Geo Energy B–
with negative outlooks.REGIONAL
OIL ROUT HITS ASIAN CREDITSIndonesian and Indian commodities-related
credits have borne the brunt of the oil rout
that started after an agreement around
production cuts between OPEC and Russia
collapsed earlier this month.
The January 2030 bonds of Indonesian
state-owned oil company PERTAMINA widened
by more than 250bp over Treasuries this
month, while BAYAN RESOURCES‘ 2023s
dropped 15 points. PetroChina’s 2025s, on
the other hand, only widened by about
30bp.
The credit standing of China’s three oil
majors – PETROCHINA, SINOPEC and CHINA
NATIONAL OFFSHORE OIL CORPORATION – has so far
been robust enough to withstand the plunge
in crude prices, but a prolonged oil slump
may prompt a review of their ratings,
according to a S&P report.
The ratings agency cut its Brent oil price
assumption for the rest of this year to US$40
per barrel from US$60 per barrel. It was
trading at US$30.15 on Friday.
“As a result of our lower oil price
assumptions, we have revised our forecasts
for the three Chinese oil majors and we
expect their credit metrics will all weaken,”
said analyst Danny Huang.
US crude prices reversed some losses
late on Thursday after US President
Donald Trump said he could get involved
in the dispute between Saudi Arabia and
Russia. Prices are still down around 60%
this year.EUROPE/AFRICA
RUSSIA
CBOM JUMPS ON CHEAPENING BONDSCREDIT BANK OF MOSCOW is taking advantage of
depressed pricing by offering to buy back up
to US$200m-equivalent of its shorter-dated
senior bonds.
The lender is targeting its dollar-
denominated 5.875% 2021s, 5.55% 2023s,
7.121% 2024s, 4.70% 2025s, as well as its
euro-denominated 5.15% 2024s.
The bank said it is taking advantage of its
liquidity position and market volatility to
proactively manage its liabilities.
The buyback is being conducted via a
MODIlEDû$UTCHûAUCTION
“Probably the offered levels are somewhat
low, but they should be viewed in terms of
the overall market volatility,” said a banker
familiar with the matter.
“We have the lower levels there because
the market can drop further so we are
protecting the client’s side. But investors are
NOTûBOUNDûTOûANYûlXEDûPRICEv
The 2025s, for example, were quoted at
99/99.355 at the beginning of March,
according to MarketAxess prices. They have
since moved to 79.50/80.
CBOM is offering a minimum purchase
price of 72 for the 2025s.
The banker said it highlighted the bank’s
healthy liquidity in that it has US$200m to
spend. He does not, though, expect to see a
mURRYûOFûBUYBACKSûINûTHEûMARKET
“I don’t see that many [Russian] issuers
trading below par,” he said. “For those that
are, the main reason is because those credits
are somewhat weaker or not as strong as the
investment-grade names. They would prefer
to stick to their cash position.”
CBOM’s offer expires on March 26.
Citigroup and Societe Generale are dealer
managers.REGIONAL
EM TRADERS SWIM IN DANGEROUS
WATERSThe perils of being an emerging-market
credit trader have been laid bare by some
extreme moves since February, although the
fact that some have lived through previous
bouts of intense volatility shows there is a
knack to survival.
The spread on the JP Morgan EMBI has
doubled in a calendar month, from 290bp
on February 21 it stood at 587bp as of March19 – the widest level in more than 10 years.
This has coincided with a collapse in the oil
price, with Brent futures shedding about
50% since the start of March, falling to
US$26 per barrel.
“It’s carnage,” said one EM trader. “I
EXPECTûlVEûORûSIXûDESKSûAREûCOMPLETELYûSHUTû
DOWNû0EOPLEûGETûlREDûANDûBANKSûEXITû%-û
credit on moves like this.”
The CEEMEA secondary market is littered
with issuers that have seen their bonds
suffer eye-watering losses thanks to fears
over a coronavirus-inspired global slowdown
and a nosedive in the price of oil.
Notable losers during the meltdown have
been Angola, Oman, Ukraine and Lebanon,
although many other names have seen
similar losses.
Angola’s 2025s, as just one sign of the
severe moves in the market, are bid around
60, according to MarketAxess prices, having
been quoted above par on March 9.
The tide has even turned on former
darlings. Fixed-income traders covering
Ukraine at Bank of America secured a
hefty bonus last year, largely thanks to a
spectacular rally in the prices of the
sovereign’s bonds and GDP-linked
warrants.
The warrants were bid at 57 at the
beginning of 2019, rising to around 108 by
the middle of February 2020. They have
since plunged back down to 53.
“I’m hearing people are being carried
out,” said a second EM trader about the
CEEMEA secondary market. “I don’t think
everyone will be in their seats again this
time next year.”
A third EM trader agreed that many had
been hurt by the moves.
“A lot of the Street – including myself –
is struggling right now,” he said. “My
product is barely trading and you can’t
shift risk.”
The third trader said everything was one-
way selling as investors drop risk and buildInternational Financing Review March 21 2020 51EMERGING MARKETS EUROPE/AFRICAALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Europe/Africa
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L21 JP Morgan 12 3,982.92 17.2
2 Citigroup 5 2,195.74 9.5
3 SG 4 1,798.35 7.7
4 BNP Paribas 5 1,738.07 7.5
5 Deutsche Bank 3 1,737.76 7.5
6 UniCredit 3 1,607.91 6.9
7 Morgan Stanley 2 1,345.85 5.8
8 Raiffeisen Bank Intl 3 1,250.17 5.4
9 Indl & Comm Bk China 4 1,160.74 5.0
10 Gazprombank 3 793.65 3.4
Total 19 23,222.578 IFR Emerging 2325 p 47 - XX.indd 51 20 / 03 / 2020 18 : 57 : 17