Tone for EM 'poor'; Russia's Severstal, Russian Standard and Poland's BRE Bank sell notes

By Christine Van Dusen

Atlanta, Oct. 4 - OAO Severstal, BRE Bank SA and JSC Russian Standard Bank, sold notes on Thursday alongside Zambia-focused First Quantum Minerals Ltd. and Indian Oil Corp. Ltd. as investors moved past the U.S. presidential debate and kept an eye on Spain.

"Yesterday's presidential debate has had a limited effect on markets, and the main news of the European morning was a successful Spanish government bond auction," according to a report from Barclays.

The market's moves are more likely tied to recent Federal Reserve and European Central Bank decisions, political risk in the United States and euro area and ongoing concerns about the global economic situation, the report said.

The tone was "poor" for trading on Thursday, with some activity noted for recent issues from Qatar Islamic Bank SAQ and Abu Dhabi-based First Gulf Bank PJSC, a trader said.

Bonds from Ukraine have managed to hold up fairly well this week, with most of the action focused on the long end of the curve, said Svitlana Rusakova of Dragon Capital.

"A few good offers in Ukraine 9¼% 2017s were taken out from the market and the bonds were quoted at 105 bid, 106 offered," she said. "However, the bond looks the cheapest on the curve now."

The sovereign's 2020s and 2021s have gained a point while quasi-sovereign Naftogaz has been quoted "a touch higher" at 101.50 bid, 102.50 offered, she said.

She also noted some buying interest in Ukreximbank's 2015s, which were sighted moving up to 96.25 bid, 9.25 offered.

"Oschadbank stabilized at 95.25 bid, 96.75 offered," she said. "Other corporate names stood pretty quiet."

From the Turkish banking sector, GarantiBank held in better than its peers, which moved wider on negative headlines out of Turkey and Syria, a trader said.

Indian Oil prices notes

In its new deal, New Delhi-based oil and gas company Indian Oil priced S$400 million of 4.1% notes due Oct. 15, 2022 at par to yield 4.1%, or Treasuries plus 221 basis points via DBS and Standard Chartered Bank.

This followed the Wednesday pricing of Indian Railway Finance Corp. Ltd.'s $300 million issue of 3.417% notes due Oct. 10, 2017.

The notes came to the market at par to yield 3.417%, or Treasuries plus 280 bps, tighter than talk of Treasuries plus 310 bps.

Barclays, Bank of America Merrill Lynch and Citigroup were the bookrunners for the deal.

Indian Railway Finance is a subsidiary of New Delhi-based Indian Railways.

First Quantum sells bonds

Thursday also saw First Quantum Minerals price a $350 million issue of seven-year senior notes at par to yield 7¼% on Thursday, according to an informed source.

The yield printed 12.5 bps inside of yield talk that was set in the 7½% area.

Citigroup and Jefferies were the joint global coordinators and joint bookrunners. BNP Paribas was a joint bookrunner.

The deal was marketed to emerging markets accounts and high-yield accounts, market sources said.

The Vancouver, B.C.-based mining and metals company, which has operations in Zambia, plans to use the proceeds for general corporate purposes.

Russian names dominate primary

In another new deal, Russian steel and mining company Severstal sold $750 million 5.9% notes due Oct. 17, 2022 at par to yield 5.9%, a market source said.

The notes priced at the tight end of talk, set at 5.9% to 6%.

Citigroup, ING, JPMorgan and VTB Capital were bookrunners for the Rule 144A and Regulation S deal.

And Russian Standard Bank priced a $350 million issue of 10¾% notes due April 10, 2018 at par to yield 10¾%, in line with talk, set at the high-10% area.

Goldman Sachs, UBS and VTB Capital were the bookrunners for the Rule 144A and Regulation S deal.

BRE does deal, VTB ahead

Warsaw-based lender BRE Bank priced a €500 million issue of 2¾% three-year notes at 99.779, according to a company release.

Bank of America Merrill Lynch, UBS Bank Ltd. and Commerzbank AG managed the deal.

And Moscow-based lender VTB Bank set price talk at the 7¼% area for a planned issue of 10-year notes, a market source said.

Sellers for Qatar Islamic

In trading, the recent $750 million issue of 2½% notes due 2017 from Qatar Islamic Bank saw only sellers on Thursday, a trader said.

"Poor tone," he said. "Of course with Asia getting 30% of this issue it was clear there would be more loose bonds floating around this morning. But the demand, for the moment, is not able to take down the paper."

The notes priced on Tuesday at par to yield mid-swaps plus 175 bps via Deutsche Bank, HSBC, Qinvest and Standard Chartered in a Regulation S deal.

Early Thursday, the 2017s were seen at 100.30 bid, 100.40 offered. Later in the session, the notes traded at 100.28 bid, 100.38 offered. They closed near 100.20.

First Gulf notes "steady"

Also from the Middle East, Abu Dhabi-based First Gulf Bank's recent $650 million issue of 2.862% notes due 2017 opened Thursday at 100.24 bid, 100.23 offered, a trader said.

The notes priced Monday at par to yield mid-swaps plus 210 bps with bookrunners Citigroup, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered in a Regulation S deal.

Later on Thursday, the notes were quoted at 100.25 bid, 100.35 offered and 100.18 bid, 100.33 offered.

"Pretty steady again today, trading between 100.25 and 100.35 and closing out at 100.25," the trader said at the end of the session.

DEWA trades up

Dubai Electricity and Water Authority (DEWA)'s 2020 notes were trading Thursday 117 bid, 117.50 offered following news of the company's plan to issue notes.

On Wednesday the notes were seen at 116.75, a trader said.

Later on Thursday, DEWA's 2020s were quoted at 118.62 bid, 119.37 offered.

Meanwhile, from Africa, five-year credit default swaps for South Africa were seen trading at 150 bid, 154 offered, a trader said.

"Sovereign bonds feel like there's some paper around," he said. "Investec holds steady."

Paul A. Harris and Aleesia Forni contributed to this article.

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