China’s Redco prices; Russian notes underperform; EM&F sets marketing trip; Berau deal ahead

By Christine Van Dusen

Atlanta, July 25 – China’s Redco Properties Group Ltd. sold notes as most emerging markets assets finished the week on solid footing, with only bonds from Russia suffering as the European Union outlined sanctions against the sovereign.

“As we approach the weekend, the potential for military escalation and Western sanctions appears higher than ever,” a London-based analyst said.

The E.U.’s sanctions, following stricter penalties from the United States, were crafted after last week’s crash of a Malaysian Airlines flight in an area of Ukraine that is controlled by Russia-backed rebels.

By Friday, bank bonds from Russia were an average of 63 basis points wider while other corporates saw spreads move out about 42 bps, the analyst said.

Elsewhere in the emerging markets universe, bonds performed well, she said, with particular outperformance from Turkey, where positive economic reports pushed bank bonds about 17 bps tighter.

From the Middle East, most investment-grade names saw solid demand, and perpetual notes were popular, the analyst said.

In its new deal, China-based property developer Redco priced $125 million 13¾% notes due 2019 at par to yield 13¾%, matching talk, a market source said.

Hongkong and Shanghai Banking Corp. Ltd., ICBC International Capital Ltd. and Kingston Securities Ltd. were the global coordinators for the Regulation S offering.

Guotai Junan Securities (Hong Kong) Ltd., HSBC, ICBC, Kingston, Morgan Stanley & Co. International plc, SC Lowy Financial (HK) Ltd. and VTB Capital plc were the lead managers and the bookrunners.

The company plans to use the proceeds to refinance some existing debt, to finance its existing and new property development projects and for other general corporate purposes.

Roadshow for EM&F

Poland’s EM&F Financing AB planned to begin a roadshow on Monday for a €240 million issue of six-year notes (expected ratings: B2/B/), a market source said.

JPMorgan, Santander, Societe Generale, Unicredit and RBS are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow will end on Thursday.

The proceeds will be used to repay debt.

Berau to issue dollar notes

Singapore’s Berau Capital Resources II Pte. Ltd. is looking to issue $450 million of notes due 2019, according to a company announcement.

The proceeds from the Rule 144A and Regulation S deal will be used to repay and redeem the company’s outstanding 12½% notes due 2015.

The issuer is a subsidiary of Indonesia-based Berau Coal Energy Tbk., which is based in Jakarta.

Tata draws orders

India-based Tata Steel Ltd.’s $1.5 billion issue of notes due 2020 and 2024 drew an order book of $4.7 billion, a market source said.

The deal included $500 million 4.85% notes due 2020 that priced at par to yield 4.85%, following talk in the low-to-mid-5% area.

That tranche drew $4.4 billion of orders, with 58% from Asia, 12% from the offshore United States and 30% from Europe, the Middle East and Africa.

The $1 billion 5.95% notes due 2024 priced at par to yield 5.95%, following talk of a yield in the mid-6% area.

That tranche drew 59% of its orders from Asia, 23% from Europe and 18% from the offshore United States.

ANZ, BofA Merrill Lynch, BNP Paribas, Citigroup, Credit Agricole CIB, Deutsche Bank, HSBC, Morgan Stanley, Rabobank International, RBS, SBI Capital Markets and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The proceeds will be used for paying debt and for general corporate purposes.

Final book for Modern Land

Modern Land (China) Co. Ltd.’s new issue of $125 million 12¾% notes due 2019 drew a final book of $275 million, a market source said.

The notes came to the market at 99.101 to yield 13%.

Credit Suisse Securities (Europe) Ltd., Goldman Sachs (Asia) LLC, HSBC Ltd., J.P. Morgan Securities plc, Guotai Junan, Morgan Stanley and CLSA Ltd. were the joint bookrunners and joint lead managers for the Regulation S offering, with Credit Suisse and Goldman Sachs as the joint global coordinators.

About 88% of the orders came from Asia and 12% from Europe, with 62% from fund managers and 38% from private banks.

China Railway oversubscribed

China Railway Construction Corp. Ltd.’s $800 million 3.95% perpetual notes that priced at par attracted $7 billion of orders from 240 investors, a market source said.

The notes came to the market at a yield of 3.95%, or Treasuries plus 225.1 bps, with Citigroup, HSBC, BNP Paribas, DBS Bank and UBS in a Regulation S deal.

About 85% of the orders came from Asia and 15% from Europe.

Fund managers picked up 82%, private banks 7%, insurers 6% and banks 5%.

Investors go for Greenko

About $1.4 billion of orders came in for India-based Greenko Group plc’s new $550 million issue of 8% notes due 2019, which priced at par to yield 8%, a market source said.

About 39% of the orders came from the United States, 31% from Europe and 30% from Asia.

Fund managers accounted for 90%, pension funds 5% and private banks 5%.

Deutsche Bank, Barclays, Investec, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will primarily be used to refinance some debt and repay loans and for general corporate purposes.

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