VEB, Romania sell notes; better buyers seen for Qatar; price whispers from Coca-Cola Femsa

By Christine Van Dusen

Atlanta, Feb. 14 - Russia's Vnesheconombank (VEB) and Romania sold notes on a "fairly active" day for emerging markets assets, with slightly wider spreads due to negative macroeconomic news from Japan and Germany.

The Markit iTraxx SovX index spread opened 2 basis points wider on Thursday, as did the corporate index, amid mostly negative macroeconomic news.

"Not quite as active as yesterday, but nonetheless fairly active which should not be the case tomorrow," a London-based trader said.

Still, issues from the Middle East and North Africa performed well during the European morning.

"They're 2 bps to 3 bps tighter after a good session yesterday, with particularly strong interest in Qatar," a London-based analyst said.

The news that Qatar's sovereign wealth fund is looking to invest up to $3.5 billion into Russia's VTB Bank pushed the lender's bonds tighter, with the perpetuals narrowing by 25 bps, the 2022s by 26 bps, the 2020s by 14 bps and the 2018s by 19 bps.

"Generally better buyers around," the London-based trader said. "Feels pretty good from a technical point of view, and the paper that was taken out of the market yesterday leaves the Street firmly on the bid for the investment grade Abu Dhabi and Qatar names."

Meanwhile, several issuers took steps forward on deals, with Mexico's Coca-Cola Femsa SAB de CV whispering guidance on new notes, Russia's Promsvyazbank planning a dollar bond and Abu Dhabi Commercial Bank and Mexico-based Tenadora Nemak SA de CV scheduling roadshows.

Middle East in focus

In trading on Thursday, buyers were noted for Dubai-based corporate issues, including those from Emaar Properties and Jafza Holdings.

"Also saw some demand on Majid al Futtaim Holdings and the typical high-yielders," a trader said. "Some front-dated bonds are very popular, like Qtel's 2014s, Qatari Diar's 2015s and Mubadala front end."

Bahrain, meanwhile, was a bit "choppy," he said, with the 2022s trading between 112½ and 113 in the afternoon.

"Very good two-way activity on Dubai Holding's 2014 euro notes, with retail closing at 99.62 bid, 100.12 offered with lots of little nibbling at par," he said.

Emirates nearly unchanged

The recent issue of 4½% notes due 2025 from Dubai's Emirates Airline traded Thursday at par bid, 100½ offered after recently pricing at 99.941 to yield mid-swaps plus 300 bps.

On Wednesday the notes traded at par.

Citigroup, Standard Chartered, Deutsche Bank, JPMorgan, Emirates NBD and Morgan Stanley were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

The company's 2016 notes were quoted Thursday at 105.37 bid, 105.87 offered. On Wednesday the notes saw demand near 105.60, a trader said.

ADIB bonds 'popular'

Abu Dhabi Islamic Bank recent $1 billion issue of 6 3/8% perpetual Islamic bonds was quoted Thursday at 104.10 bid, 104.45 offered, a trader said.

The notes priced at par to yield 6 3/8% via Abu Dhabi Islamic Bank, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S-only sukuk deal.

The final book was $15.5 billion.

"ADIB perps are closing out at 104 bid, 104.35 offered with limited activity," he said. "Having a brief look at some stats, however, this is my most popular bond so far this year."

Kuwait Finance tightens

Kuwait Finance House saw its 5 7/8% notes due 106 trade Thursday morning at 108 bid, 108¾ offered, a trader said.

"That's 30 bps tighter on the week," he said.

From Africa, sellers were seen for notes from Angola, Nigeria and Zambia.

"Either it's bid in Africa or it's not, and for the most part at the moment it's not," he said. "Ghana and Gabon still do feel like they have a sneaky bid."

Meanwhile, the South Africa sovereign was stable on a spread basis, he said.

Ukraine bonds stay firm

Bonds from Ukraine have remained mostly firm during the week, with the 2017s unchanged at 108½ bid, 109½ offered.

The 2022s, however, moved down to 1013/4, said Svitlana Rusakova of Dragon Capital.

From the corporate sector, demand was noted for bonds from Mriya Agro Holding plc, CB Privatbank and Avangard, she said.

VEB sells bonds

In its new deal, Russian lender VEB priced a €1.5 billion two-tranche issue of notes due on Feb. 21, 2018 and 2023 via bookrunners Barclays, Commerzbank and ING, a market source said.

The Regulation S deal included €1 billion 3.035% notes due 2018 that priced at par to yield 3.035%, or mid-swaps plus 195 bps.

The second tranche totaled €500 million 4.032% notes due 2023 that priced at par to yield 4.032%, or mid-swaps plus 215 bps.

Romania prices notes

Also on Thursday, Romania priced a $1.5 billion issue of 4 3/8% notes due Aug. 22, 2023 at 98.963 to yield 4½%, or Treasuries plus 249 bps, a market source said.

Barclays, BNP Paribas, Citigroup and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

In deal-related news, Russia-based lender Promsvyazbank is planning a dollar-denominated issue of tier 2 notes due November 2019, according to a company announcement.

HSBC, JPMorgan and Promsvyazbank are the bookrunners for the Regulation S deal.

Mexican issues ahead

Mexico-based bottler Coca-Cola Femsa set price whispers at the Treasuries plus 80 bps area for its upcoming issue of 10-year notes via Citigroup, Goldman Sachs and JPMorgan.

And Mexico-based Tenadora Nemak will set out on Feb. 18 for a roadshow to market a potential issue of Rule 144A and Regulation S notes, a market source said.

Citigroup, Credit Suisse and Morgan Stanley are arranging the marketing trip, which begins in Santiago and travels to Boston and Los Angeles before concluding on Feb. 20 in New York.

Tenadora Nemak is a Garcia, Mexico-based producer of aluminum engine blocks, cylinder heads and transmission components that is controlled by Alfa SAB de CV.

ADCB plans marketing trip

A roadshow for Abu Dhabi Commercial Bank's planned dollar-denominated issue of benchmark-sized notes will commence Feb. 18, a market source said.

Barclays, ING, JPMorgan, National Bank of Abu Dhabi, RBS and Abu Dhabi Commercial Bank are the bookrunners for the deal.

The roadshow will start in Geneva, then move to London and Hong Kong before finishing up on Feb. 25 in Singapore.

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