Mexico to issue century eurobond; Akbank dollar deal on deck; Russia, Ukraine bonds suffer

By Christine Van Dusen

Atlanta, March 12 - Mexico announced plans for a sterling-denominated century bond and Turkey's Akbank TAS pondered a dollar-denominated issue on a Wednesday that saw Latin American sovereigns trade well while bonds from Russia took a beating.

"The market remains jumpy," a New York-based trader said.

As the Crimean parliament offered voters the option to become part of Russia now or later - a move decried by Ukraine officials - bonds from Russia and Ukraine suffered in trading.

"Russia continues to look ugly, with another weak open," a London-based analyst said. "Credit default swaps are 11 basis points wider while Russia's 2030s are down 1 point."

Russian banks and corporates were down 1 point to 2 points, widening by 15 bps to 35 bps, she said.

"We see almost universal selling," she said.

Said a trader, "There has been some serious re-pricing in assets from Russia."

Bonds from Ukraine have dipped too, said Svitlana Rusakova of Dragon Capital.

"Corporates were inactive, with only a few decent bids around," she said.

Bonds from Turkey were wider, about 9 bps amid limited activity for banks, the analyst said.

"Central and emerging Europe, a safe haven in recent weeks, are also under some pressure, with Hungary, Croatia and Serbia 10-year paper 8 bps wider on average," she said.

Market-watchers are eyeing the region.

"We now have to keep Central and emerging Europe on watch for any negative spillover effects from the tension in Ukraine and Russia," according to a report from Commerzbank. "Otherwise, data continue to look constructive in EM."

Gulf region outperforms

The Middle East and North Africa stood out in trading on Wednesday as the strongest among most emerging markets bonds, the analyst said.

"The most robust sector, with good two-way activity," she said.

But spreads were mixed, a London-based trader said.

"It feels like some Qatar paper came out intra-day," he said. "It also felt like some Dubai paper was washing around this morning. Kuwait Projects Co.'s 2019s have been very active again, going out at 103.37 bid, 103½ offered at the close, still 30 bps better on the month."

GEMS trades up

United Arab Emirates-based Global Education Management Systems Ltd.'s recent $200 million issue of 12% perpetual notes traded again with a 114 handle after pricing at par, he said.

Abu Dhabi Islamic Bank, Credit Suisse and Morgan Stanley were the bookrunners for the Regulation S deal.

Lat-Am corporates weaken

Looking at Latin America, most corporate credits opened on Wednesday a bit weaker, a New York-based trader said.

The new notes from Brazil's Petroleo Brasileiro SA (Petrobras) "darted out and traded wider by 9 bps to 10 bps" on Wednesday morning but recovered at least half of that widening later in the session, he said.

Meanwhile, banks from Colombia were trading fairly well amid poor liquidity while banks from Chile and Peru outperformed, he said.

"Clients were not as active as on Monday and Tuesday, but we still see a few large euro real-money guys selling Eastern Europe sovereigns and corporates and buying Latin American sovereigns and corporates in nice chunky blocks," he said.

Venezuela improves in trading

On the sovereign side in Latin America, bonds from Venezuela traded up 25 cents to 50 cents, another New York-based trader said.

Overall volumes were lighter and account activity was sell-side driven, he said.

"Latin American EM seems to be a place people are talking about trying to hide, to weather the news out of other regions," he said.

Mexico, Akbank deals ahead

Mexico is looking to issue sterling-denominated notes due in March of 2114 in a Securities and Exchange Commission-registered deal, according to a governmental filing.

Barclays and Goldman Sachs are the bookrunners for the transaction, which should price sometime this month.

The proceeds will be used for general governmental purposes, including refinancing, repurchasing or retiring domestic and external debt.

And Turkey-based lender Akbank is looking to issue up to $45.1 million of bonds, a market source said.

Pactera roadshow this week

Pactera Technology International Ltd.'s buyout by the Blackstone Group will include funding from a $275 million offering of seven-year senior notes that will be marketed on a roadshow starting Thursday, a syndicate source said.

The roadshow for the Rule 144A and Regulation S issue will end March 20.

BofA Merrill Lynch is the lead left bookrunner for the Rule 144A and Regulation S offering. Citigroup Global Markets Inc. and HSBC are the joint bookrunners.

Proceeds will be used to help fund the acquisition of Pactera by Blackstone.

Pactera is Beijing-based consulting and technology services provider.

Paul A. Harris contributed to this article.

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