New notes from VTB, China Properties; Sabic, Al Khalij bonds struggle; Ematum bonds suffer

By Christine Van Dusen

Atlanta, Oct. 22 - Russia's OJSC VTB Bank and China Properties Group Ltd. sold notes on a Tuesday that saw investors awaiting, then reacting to, weaker-than-expected economic data from the United States.

U.S. Treasuries opened flat on Tuesday morning, and the Markit iTraxx SovX CEEME ex-EU index spread on Tuesday opened 3 basis points wider, at Treasuries plus 348 bps, while the corporate index began the session at 240 bps.

"Turkey is opening slightly wider this morning," an analyst said. "The Middle East and North Africa are largely unchanged, with activity relatively limited ahead of payrolls."

Once the non-farm payrolls data was released - showing that the United States added just 148,000 jobs in September - investor sentiment got a bit of a boost on the expectation that the Federal Reserve will continue to shore up the economy with bond purchases.

Meanwhile, trading of emerging markets assets was quite busy on Tuesday, a London-based trader said.

"A few of the more recent issues are struggling a tad, on a spread basis, to keep up with the rates move," he said.

He pointed to the recent issue of 2 5/8% notes due in five years that Saudi Arabia's Saudi Basic Industries Corp. (Sabic) recently priced at 99.449. The notes were seen Tuesday at 99.37 bid, 99½ offered.

Qatar-based Al Khalij Commercial Bank's recent issue of 3¼% notes due 2018, which priced at 99.575, moved wider by as much as 7 bps on Tuesday.

"Elsewhere, bank perpetuals got a boost from the stronger fixed-income market, generally," he said. "Morning flow saw sellers of bank paper."

In deal-related news, several issuers took steps toward printing notes, including Brazil's JBS SA, Aluminum Corp. of China Ltd. (Chalco), Majid al-Futtaim Holdings LLC (MAF) and Peru's San Miguel Industrias PET SA.

VTB prices bonds

Russia's VTB Bank priced CHF 300 million 2.9% notes due 2018 at par to yield 2.9%, a market source said.

The notes were talked at a spread in the mid-swaps plus 240 bps area before VTB revised guidance to a yield of 2.9% to 2.95%.

Credit Suisse, Commerzbank and VTB Capital were the bookrunners for the deal.

VTB is a Moscow-based lender.

China Properties sells notes

In its new deal, Hong Kong-based China Properties priced a $100 million add-on to its existing 13½% notes due 2018 at 100.875 to yield 13.251%, a market source said.

BofA Merrill Lynch was the bookrunner for the Regulation S deal.

The initial $150 million issue came to the market at 99.117 to yield 13¾%.

The proceeds will be used for expansion strategies and refinancing purposes.

Haitong launches

China's Haitong Securities Co. Ltd. - through indirect wholly owned subsidiary Haitong International Finance Holdings Ltd. - launched a dollar-denominated issue of benchmark-sized notes due in five years at a spread of 275 bps over Treasuries, according to a syndicate source.

The notes were talked at a spread in the Treasuries plus 280 bps area.

Bank of China, Deutsche Bank, Haitong International, Standard Chartered Bank, Barclays, HSBC, ICBC International, Nomura Securities, BofA Merrill Lynch, BNP Paribas, JPMorgan, UBS and Credit Suisse are the bookrunners for the Regulation S deal.

The proceeds will be used to meet business operation needs, adjust debt structure, supplement working capital or make investments.

Other details on the launch were not immediately available at the market close on Tuesday.

The securities firm is based in Shanghai.

DFCC talks notes

Sri Lanka's Development Finance Corp. of Ceylon (DFCC Bank) set talk in the 9 5/8% area for its five-year issue of dollar-denominated notes, a market source said.

BofA Merrill Lynch and Citigroup are the bookrunners for the Regulation S deal.

The proceeds will be used to retire short-term borrowings, to on-lend for infrastructure development and for general corporate purposes.

Guidance from JBS, Chalco

Brazil-based meat processor JBS set initial talk in the 8 1/8% area for a seven-year issue of dollar-denominated and benchmark-sized notes, a market source said.

BB Securities, Bradesco BBI, BTG Pactual, JPMorgan and Santander are the bookrunners for the Rule 144A and Regulation S deal.

And China-based metals manufacturer Chalco set talk in the 6 5/8% area for its upcoming issue of dollar-denominated and perpetual notes, a market source said.

HSBC is the sole global coordinator. ANZ and Natixis are the joint leads for the Regulation S deal.

Price talk from Dubai conglomerate

Dubai-based conglomerate MAF set initial price talk in the mid- to high-7% area for its upcoming dollar-denominated issue of perpetual benchmark-sized notes, a market source said.

"That is pretty much where Emirates NBD's perpetual is trading, yield-wise," a trader said. "Will be interesting to see how this goes. The name is well-known and well-liked regionally, so private banking interest should be high."

BofA Merrill Lynch, Emirates NBC, Goldman Sachs, HSBC, JPMorgan and Standard Chartered Bank are the bookrunners for the Regulation S deal.

"Looks interesting," a trader said. "The name regionally is very well regarded. I suspect retail, regionally, will be buyers. I also suspect European asset managers should show interest on valuations versus high-grade euro perpetuals."

Peruvian company sets roadshow

Peru-based PET container marketer San Miguel Industrias will set out on Wednesday for a roadshow to market a dollar-denominated issue of notes, a market source said.

BofA Merrill Lynch and Citigroup are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow will begin in Lima and London and travel to Santiago, Geneva, Zurich, Boston and Los Angeles before concluding on Oct. 29 in New York.

Ukraine sees profit-taking

In trading, Ukraine's sovereign bonds so far this week have been slightly "off," said Svitlana Rusakova of Dragon Capital.

"A bit of profit-taking seemed due," she said.

The sovereign's 2023s saw some demand between 89 and 891/4.

"On the corporate and quasi-sovereign side, however, we still saw strong performance with demand outstripping supply," she said.

Middle East in focus

Traders sighted solid demand for bonds from Dubai and its corporates on Tuesday.

"It feels like there's plenty of bank paper around, so perhaps some senior bank supply is coming?" a trader said.

Buyers emerged for Abu Dhabi Commercial Bank's 2023s while sellers surfaced for Emirates Islamic Bank.

"Bahrain is holding well," he said. "Buyers of Kuwaiti paper."

Romania gets attention

Tuesday saw some activity for the new issue of notes from Romania, a trader said.

The sovereign priced a €500 million increase of its existing 4 5/8% notes due 2020 at a yield of 4.15%, a market source said.

Citigroup, Deutsche Bank, HSBC and Societe Generale were the bookrunners for the Regulation S deal.

"Romania tapped their euro 2020s yesterday at 4.15%, which is seeing some activity this morning, trading slightly better," a London-based analyst said. "Not quite back to pre-tap levels."

The original €1.5 billion issue priced in September at 99.16 to yield 4.769%, or mid-swaps plus 295 bps.

News sends Ematum bonds down

The 6.305% notes due 2020 that Mozambique-based government agency Ematum priced in September at 92.051 traded lower on Tuesday on news that the country's peace deal was no longer in effect, a trader said.

The Mozambique military attacked the opposition party's base this week after the rebel group allegedly disrupted the country's coal transport. In response, the opposition party - known as Renamo - nullified a 1992 peace deal.

Ematum's 2020s on Tuesday traded in the 93¾ to 94¾ context, wider by 45 bps, the trader said.

Samarco does deal

On Monday, Brazil's Samarco Mineracao SA priced a $700 million issue of 5¾% notes due 2023 at 98.879 to yield 5.9%, or Treasuries plus 330 bps, a market source said.

The notes were initially talked at a spread in the 362.5 bps area.

BofA Merrill Lynch, HSBC and Mitsubishi UFJ Securities were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to expand the company's processing, logistics and production facilities.

Samarco is a Belo Horizonte, Brazil-based mining and iron ore company that is joint-owned by Brazil's Vale SA and BHP Billiton plc.

SK Broadband oversubscribed

The new issue from South Korea's SK Broadband Co. Ltd. - $300 million 2 7/8% notes due 2018 that priced at 99.185 - drew a final order book of about $3.6 billion from 232 accounts, a market source said.

About 73% of the orders came from Asia, 25% form Europe and 2% from the offshore United States.

The notes came to the market at a yield of 3.052%, or Treasuries plus 170 bps, with bookrunners Barclays, Deutsche Bank and HSBC in a Regulation S deal.

Asset managers accounted for 78%, banks and central banks 12%, private banks 7% and insurers 3%.

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