Dubai Electricity, Reliance, Pemex, Severstal flow from clogged pipeline; secondary quiet

By Christine Van Dusen

Atlanta, Oct. 14 - The new deal pipeline got even more stuffed on Thursday as numerous issuers planned notes and just a handful - including Dubai Electricity and Water Authority, Reliance Holding, Severstal and Petroleos Mexicanos SAB de CV - brought deals to market.

Meanwhile, the recent buying frenzy took a much-needed breather, and the secondary market remained somewhat slow given recent spread tightening.

"We're starting to finally see some profit-taking after a week of very, very aggressive buying," a Connecticut-based trader said. "Real money was being put to work, and prices got ahead of themselves. So there was a much-needed pullback today with equities a little softer and the market a little quieter across the board."

Venezuela and Argentina were "off about 1.5 points off yesterday's highs," he said.

Even Mexico's recent $1 billion century bond, which priced earlier this month at 94.276 to yield 6.1% and saw stellar performance afterward, "was about 1 point lower than yesterday," he said.

Volumes, meanwhile, were a bit light but "decent," he said. "The secondary issues have tightened to such dramatic levels, with very little room for it to move further, that some real money accounts are now forced to search out more yield and move to riskier assets."

Some accounts are moving to credits like Ivory Coast, Sri Lanka and other "more peripheral names," another market source said.

Overall, "I think the market's just a bit tired, and I think people are just reevaluating a bit today," the Connecticut trader said. "I wouldn't be surprised if volumes spiked again tomorrow. There are guys waiting in the wings and stuff to do. But today's been more of a day of reflection. People are saying, 'Wait a minute. Did we move too fast, or is this rally going to continue?'"

Dubai Electricity, Severstal price

In the primary market on Thursday, state-owned utility company Dubai Electricity and Water Authority priced a $2 billion issue of senior notes due 2016 and 2020 in a Rule 144A transaction, a market source said.

The deal included $500 million 6 3/8% notes due Oct. 21, 2016, which priced at par to yield Treasuries plus 522.1 basis points. Price talk was set at 6½% to 6 5/8%.

In the second tranche, $1.5 billion 7 3/8% notes due Oct. 21, 2020 priced at par to yield Treasuries plus 493.2 bps. Price guidance was set at 7½% to 7 5/8%.

Citigroup, Credit Agricole, National Bank of Abu Dhabi, Standard Chartered and RBS were the bookrunners for the notes, which are non-callable.

And Russia-based steel and mining company Severstal priced $1 billion notes due 2017 at par to yield 6.7%, or Treasuries plus 487.1 bps.

Barclays, Goldman Sachs and RBS were the bookrunners for the Rule 144A and Regulation S notes, which were talked to yield in the 6¾% area.

Deals from Reliance, Pemex

Also on Thursday, Reliance Holding USA priced $1.5 billion of notes due 2020 and 2040 via Bank of America Merrill Lynch, Citigroup, HSBC and RBS, an informed market source said.

The deal included $1 billion 4½% notes due Oct. 19, 2020, which priced at 99.538 to yield 4.558%, or Treasuries plus 205 bps. The tranche was whispered to yield in the low 200 bps area.

The second tranche was $500 million 6¼% notes due Oct. 19, 2040 and priced at 99.024 to yield 6.323%, or Treasuries plus 240 bps. The notes were whispered to yield in the mid-200 bps area.

The Rule 144A and Regulation S notes include a change-of-control put at 101%.

The notes are guaranteed by India-based parent Reliance Industries Ltd., an energy and petrochemical company based in Mumbai.

Also pricing on Thursday was a $250 million add-on to the existing $750 million 6 5/8% perpetual notes from Mexico City-based oil and gas company Petroleos Mexicanos, which priced at 103 to yield 6.466%, a market source said.

Credit Suisse was the bookrunner for the Rule 144A and Regulation S notes, which are non-callable for five years.

The original issue priced Sept. 21 at par to yield 6 5/8%.

Buenos Aires, CET sell bonds

In other issuance, Hong Kong-based developer Central China Real Estate sold $300 million notes due Oct. 20, 2015, which came to market Wednesday at par to yield 12¼%, a market source said.

Deutsche Bank, ING and Nomura were the bookrunners for the Rule 144A and Regulation S deal, which is non-callable for three years.

Wednesday also featured Buenos Aires' pricing of a $250 million add-on to its existing $550 million 11¾% notes due Oct. 5, 2015 at 100.913 to yield 11½%, a market source said.

The original issue priced Sept. 7 at 99.076 to yield 12%.

The Czech Republic's CET 21 Spol., a subsidiary of Central European Media Enterprises Ltd., priced €170 million notes due Nov. 1, 2017 at par to yield 9%, a market source said.

BNP Paribas, Citigroup, ING and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal, which includes a call from Nov. 1, 2014 at 104.5.

And HSBC Bank Middle East priced $500 million 3% notes due 2015 at 99.572 to yield 3.093%, or mid-swaps plus 170 bps, in a Regulation S-only transaction, a market source said.

Issuers move toward market

Several other issuers planned deals, including the United Arab Emirates' Ras Al-Khaimah, which is looking to do a benchmark-sized bond, a market source said.

Citigroup and RBS are the bookrunners for the notes.

Also on Thursday, the Trade Development Bank of Mongolia set a three-year maturity for its planned issue of senior fixed-rate notes, which will total $150 million, a market source said.

ING is the bookrunner for the Regulation S-only deal, which is expected to price this week.

The day also saw Mexico-based mortgage lender Credito Immobiliario planning a non-deal roadshow starting Oct. 18, a market source said.

HSBC and Heritage Capital will arrange the investor meetings.

And Brazil-based lender Banco Industrial e Comercial SA (BicBanco) has mandated Bank of America Merrill Lynch, Citigroup, Itau and JPMorgan for an issue of senior notes due 2015, a market source said.

A roadshow for the Rule 144A and Regulation S deal will take place on Monday and Tuesday in London and New York.

Ceagro Agricola sets talk

In other deal news, Brazil-based soft-commodities trading company Ceagro Agricola Ltda. set price talk for its planned issue of $100 million senior secured notes due May 2016 at the 11% area, a market source said.

Jefferies is the bookrunner for the Rule 144A and Regulation S deal, which could price by the end of the week.

Meanwhile, Kazakhstan-based lender JSC Kazkommertsbank mandated JPMorgan and UBS to arrange a roadshow starting Monday for up to $750 million in notes due 2017, a market source said.

The roadshow will take place in Asia, Europe and the United States.

And Ukraine-based state-run import-export bank Ukreximbank set price talk for the planned $250 million tap of its existing $500 million 8 3/8% notes due April 27, 2015 at 7½% to 7 5/8%, a market source said.

Credit Suisse is the bookrunner for the Regulation S deal.

Market sources also were whispering about a possible dollar-denominated issue of 10-year notes from Brazil-based lender Banco Bonsucesso, an upcoming century bond from Brazil and a dollar bond of up to $1 billion from Korea Gas Corp.

Sberbank, others plan deals

Russia-based lender Sberbank will hold a roadshow from Wednesday to Oct. 22 for an issue of Swiss franc-denominated notes via BNP Paribas and UBS, a market source said.

And Abu Dhabi's International Petroleum Investment Co. (IPIC) is planning a benchmark-sized offering of bonds, a market source said.

In other news, the final book for Poland-based lender PKO Bank Polski SA's €800 million 3.733% notes due Oct. 21, 2015 - which priced this week at par to yield mid-swaps plus 185 bps - was €1.2 billion with more than 100 orders, a source said.

About 23% of the orders came from Western Europe, 16% from Germany, 14% from Poland, 13% Austria, 7% from the United Kingdom, 6% from Switzerland, 4% from the Czech Republic, 4% from Iberia, 4% from Italy and 9% from other areas.

Fund managers accounted for 60%, banks 24%, insurers and pension funds 6% and others 10%.

"There's definitely money for new issues," a market source said.

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