China Minsheng sets talk; Crimea votes to secede; Russian spreads widen; Turkey strong

By Christine Van Dusen

Atlanta, March 17 - China Minsheng Banking Corp. set talk for an issue of renminbi-denominated notes on Monday as the market focused on Crimea, which voted to secede from Ukraine and join Russia - a move that is expected to ramp up political tensions.

"Another concern is reports that Russian-backed troops had captured Strilkove in Eastern Europe, just across the border from Crimea, as well as protests in Donetsk and Kharkov demanding a similar referendum," a London-based analyst said. "The concern is that Russia may now use this as legal backing for intervention in Eastern Ukraine, not just Crimea."

In response, bonds from Russia opened stronger on Monday "as the market corrected after a tumultuous week," she said. "But spreads are widening."

Russian 10-year bond yields increased during the first two weeks of March by 1 percentage point to 5.6%, according to a report from UFS Investment Co.

"After the referendum the dynamics of the eurobond market will continue to depend on the situation in Ukraine this week," the report said.

Looking to other areas of emerging markets, central and Eastern Europe were strong on Monday morning, as were bonds from Turkey, the analyst said.

And bonds from Dubai-based Emaar Properties tightened as much as 20 basis points on the news that apartment and villa sales have risen, a London-based trader said.

Elsewhere in the Middle East, the tone was firm, though volumes weren't heavy.

"The major focus is Dubai, which has rolled over $20 billion of debt for just 1%," the analyst said. "Benchmark names are 5 bps to 7 bps tighter in the Middle East and North Africa."

DEWA, Dubai tighten

Dubai's roll-over was widely expected by the market but still led to better bids for sovereign and corporate bonds, a trader said.

Dubai Electricity and Water Authority's bonds and those from the Dubai sovereign closed 5 bps to 10 bps tighter, a trader said.

Also on Monday, United Arab Emirates-based Global Education Management Systems Ltd.'s recent issue of 12% perpetual notes that priced at par moved to a 115 handle on Monday, he said.

"Mixed bag on the other perpetuals," he said.

Kuwait corporates busy

Kuwait-based corporates were active on Monday, including Kuwait Projects Co. and Burgan Bank, the trader said.

"All told, Kipco was balanced, however dynamics are still in place, with buyers of the 2019s versus sellers of the 2016s and 2020s," he said. "Burgan Bank is closing at 115 bid, 115¾ offered and holding very firm."

Minsheng Banking sets talk

China Minsheng Banking set talk at 6.4% to 6.6% for its upcoming issue of RMB 20 billion tier 2 notes, a market source said.

The company recently announced that the People's Bank of China had approved a proposed issuance of tier 2 capital bonds.

No other details were immediately available on Monday.

The lender is based in Beijing.

Promsvyazbank prices notes

In other news, Russia's Promsvyazbank sold $100 million 10½% notes due 2021 at par to yield 10½%, a market source said.

The Rule 144A and Regulation S deal came to the market on Friday.

Promsvyazbank is a Moscow-based lender.

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