Reliance Industries taps market for $500 million add-on; forward calendar eyed for supply

By Paul A. Harris

Portland, Ore., Feb. 24 - The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit default swaps tightened by 6 basis points to 276 bps by the mid-point of the London session, according to a trader there.

The index was 14 bps tighter from the same point on Monday.

The technical picture of the asset class remains robust, with hard currency emerging markets bond funds seeing $481 million of inflows for the week to Wednesday, extending year-to-date flows to $3.61 billion, according to a market source.

In the primary market, Reliance Holding USA Inc. priced a $500 million add-on to its 5.4% notes.

Reliance taps 5.4% notes

Reliance priced a $500 million add-on to its 5.4% senior notes due in 2022 (Baa2/BBB) at a 325 bps spread to Treasuries.

The spread came at the tight end of the Treasuries plus 330 bps final price talk. Initial talk was Treasuries plus 340 bps.

The reoffer price was 101.018, resulting in a yield of 5.267%.

Barclays Capital, Citigroup Global Markets Inc. and HSBC Ltd. were the joint bookrunners.

The Mumbai, India-based petrochemical and retail conglomerate plans to use the proceeds to fund capital expenditures, to make business investments, to refinance existing debt and for general corporate purposes.

The market buzz had the order book at over $1.5 billion in the early stages of marketing, according to a debt capital markets analyst in Europe.

A rallying market

The analyst notes that Brazil's Banco Bradesco SA priced a $1 billion issue of 10-year subordinated notes (Baa1//BBB) at par to yield 5¾% and remarked that it's a remarkable yield for a 10-year subordinated deal.

The yield printed at the tight end of final price talk, which was set in the 5 7/8% area. Initial talk was set in the 6% area.

The existing Bradesco 5.9% notes due January 2021 were 103½ bid, 104 offered, or 5.33%, 5.4% offered, which means that Thursday's subordinated deal came at a 13 bps to 20 bps new issue premium over curve-adjusted secondaries.

Not all of the week's primary market stories were happy ones, however.

The Czech Republic's 3 7/8% global bonds due 2022 (A1/AA-/A+), which priced at mid-swaps plus 160 bps spread in a €2 billion issue on Monday, fell below issue price and had failed to plow their way back above water by mid-day Friday in London, a trader there said.

Market sources have suggested that the issue came too large and perhaps too tight.

The week ahead

The active calendar for the February-March crossover week contains Pan African energy producer Afren plc (/B/B), which has mandated BNP Paribas, Deutsche Bank AG and Goldman Sachs International to lead an international roadshow ahead of a possible offering of seven-year senior secured notes (/B/).

A roadshow heads to the West Coast of the United States on Monday, to Boston on Tuesday and to New York on Wednesday.

Proceeds will be used to pay bank debt and for general corporate purposes.

Based in London, Afren conducts its oil and gas exploration, development and production operations in African countries including Nigeria, Gabon, Republic of the Congo, Ivory Coast and Ghana.

Emirates NBD PJSC (A3/A+) mandated Emirates NBD Capital Ltd., HSBC and Standard Chartered Bank to set up investor meetings ahead of an anticipated renminbi-denominated Regulation S bond offering.

The meetings will begin on Wednesday in Hong Kong and Singapore.

The notes will be issued under the bank's $7.5 billion euro medium-term note program.

Dubai's Emirates NBD is the United Arab Emirates' largest bank by assets.

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