Russia's VTB does deal amid thinner liquidity; Dubai, Brazil corporate bonds fare well

By Christine Van Dusen

Atlanta, Aug. 1 - Russia's VTB Capital SA sold notes on Wednesday as ongoing demand was noted in the secondary market for Brazil's Itau Unibanco Holding SA, Dubai and several of Dubai's corporate names, including Emaar Properties, Jebel Ali Free Zone (Jafza) and Majid Al Futtaim Holdings.

"They're the new safe havens," a London-based trader said.

Still, liquidity remained thin for emerging markets assets, due to the Olympic games, Ramadan and summer vacations.

In its new deal, VTB Capital priced a $500 million tap of its 6% notes due April 12, 2017 at 103 to yield 5.267%, or Treasuries plus 470 basis points, a market source said.

The notes priced in line with talk, set at the 103 area.

VTB Capital was the bookrunner for the Rule 144A and Regulation S deal.

The original issue totaled $1.5 billion and priced at par on April 4.

In other deal-related news, the final book for Korea Finance Corp.'s new $500 million issue of 2¼% notes due 2017 was more than $1.8 billion from more than 140 investors, a market source said.

The notes priced Tuesday at 99.251 to yield Treasuries plus 180 bps via Bank of America Merrill Lynch, Deutsche Bank, HSBC, Korea Development Bank and Morgan Stanley in a Securities and Exchange Commission-registered deal.

About 51% of the orders came from fund managers, 20% from banks, 16% from the public sector, 7% from private banks and 6% from insurance companies and pensions.

DPWorld trades up

In trading on Wednesday, Dubai's DPWorld saw its 2017 notes at 109 bid, 109.75 offered after Tuesday's levels of 108.75 bid, 109.50 offered.

The company's 2037 notes were seen Wednesday at 105 bid, 106 offered. On Tuesday the notes were quoted at 104.75 bid, 105.75 offered.

And the 2017 notes from Saudi Electric Co. that traded Tuesday at 102 bid, 102.75 offered were seen Wednesday at 102.25 bid, 102.75 offered.

Qatar notes in focus

The recent $2 billion 2.099% notes due 2018 from Qatar funding vehicle SoQ Sukuk that priced at par were trading Wednesday at 100.50 bid, 100.62 offered after Tuesday's levels of 100.47 bid, 100.62 offered.

The deal's second tranche - $2 billion 3.241% notes due 2023 that also priced at par - traded Wednesday at 102.50 bid, 102.85 offered. On Tuesday the notes were quoted at 102.40 bid, 102.70 offered.

Barwa Bank, Deutsche Bank, HSBC, QInvest and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Investec catches bid

From South Africa, five-year credit default swaps were trading at 129 bid, 134 offered.

"Even the recent Investec deal is catching a small bid," a London-based trader said.

The Johannesburg-based financial company priced $300 million 3 7/8% notes due 2017 at 99.775 to yield Treasuries plus 310 bps.

HSBC, ING, Investec, RBS and Standard Chartered Bank were the bookrunners for the Regulation S deal.

On Wednesday the notes were seen at 97 bid, 98.50 offered.

Latin America 'relaxed'

Looking to Latin America, most names closed out July on a strong note and started out the month of August in a "relaxed mode," a New York-based trader said.

"Real buyers surfaced, looking for mostly high-grade liquid paper in maturities all over the map, causing most bonds to tighten [on Tuesday,]" he said. "Lat Am corporates are opening in August in a fairly relaxed mood as so far we are not seeing the strong buys experienced yesterday throughout the entire session as accounts felt obligated to get their cash positions down to close out the month."

Petrobras notes active

Tuesday saw buying of Petroleo Brasileiro SA (Petrobras) and its 2016, 2017, 2021, 2040 and 2041 notes and Brazil-based Vale SA's 2022, 2036 and 2039 notes. On Wednesday, Petrobras' 2021 notes were near 220 after starting out the week in the high 230s.

"The 2041s are approaching 240 after closing at 245 yesterday," the New York trader said.

Brazilian corporates solid

Bonds from Brazil's Minerva and JBS SA continued to perform on Wednesday as buying waned due to the difficulty in sourcing paper, another trader said.

"The BBVA Bancomer 2022 paper continues to trade well and is being supported by different account bases, including private wealth, now at 104 bid," he said.

Still, liquidity remained weak on Wednesday.

"Interdealer Latin American corporate auctions have been quiet, and that can have a big effect on overall liquidity as this has become the main tool for dealers to access Street liquidity," the trader said.

Itau Unibanco in demand

The new notes from Itau Unibanco have also seen solid demand, the New York trader said.

The lender priced $1.25 billion 5½% notes due Aug. 6, 2022 at par to yield 5½%, or Treasuries plus 399.6 bps, a market source said.

Itau, JPMorgan and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

"That traded with huge volume in a tight range, up 40 cents from new issue," the trader said.

Coazucar paper hard to find

Traders have found it difficult to source the new $325 million issue of 6 3/8% notes due 2022 from Peru's Corporacion Azucarera del Peru (Coazucar), which priced at 99.091 to yield 6½%.

Bank of America Merrill Lynch and Citigroup were the bookrunners for the Rule 144A and Regulation S deal.

"They're almost 3½ points above issue," a trader said.

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

Coazucar is part of Grupo Gloria, an agribusiness holding business in Peru.

Mexican homebuilders tense

Homebuilders from Mexico have remained under pressure this week amid less-than-stellar earnings reports, the New York trader said.

"[Urbi Desarrollos Urbanos SAB de CV] is leading the way down," he said, noting that the company's bonds traded Tuesday at 101½ bid after being quoted with a 104 handle.

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