Sinopec prices four-tranche dollar, euro deal; Franshion, Al Khalij Bank also print notes

By Christine Van Dusen

Atlanta, Oct. 9 - China Petrochemical & Chemical Corp. (Sinopec Group), Franshion Properties (China) Ltd. and Qatar's Al Khalij Commercial Bank sold notes on a mixed but busy and relatively stable Wednesday.

"Markets have opened mixed as investors are being pulled by the negative impact of the continued U.S. government shutdown," a London-based analyst said.

Pulling investors in a more positive direction was the news that President Obama was nominating Janet Yellen as the new chief of the Federal Reserve.

The Markit iTraxx SovX CEEME ex-EU index spread on Wednesday opened at 398 basis points over Treasuries, 4 bps wider than on Tuesday.

"Another fairly active day with balance flow," a London-based trader said.

In trading on Wednesday, some paper was seen floating around from Dubai Holding, a trader said.

"I would question whether there will be any supply next week, given the holidays, but let's see," he said. "Two old favorites in the euro space redeem in the next six weeks: Abu Dhabi National Energy Co.'s 2013s and Sabic Capital's 2013s. This will leave International Petroleum Investment Co.'s and Dubai Holding's 2014s as the only euro bonds from the Gulf region."

The primary market saw Singapore's Marco Polo Marine Ltd. and Russia's Home Credit & Finance Bank set talk for their upcoming bond issues.

And the big deal of the day came from China's Sinopec, which priced $2.75 billion of notes due 2018, 2023 and 2043 and €550 million of notes due 2020 in a Rule 144A and Regulation S deal, a market source said.

Dollar notes from Sinopec

Sinopec's new deal included $750 million 2½% notes due 2018 that priced at 99.413 to yield 2.626%, or Treasuries plus 120 bps. The notes were talked at a spread in the 125 bps area.

The second dollar tranche, totaling $1.5 billion, consisted of 4 3/8% notes due 2023 that priced at 99.312 to yield 4.461%, or Treasuries plus 180 bps. The notes were talked at a spread in the 185 bps area.

The third tranche of $500 million 5 3/8% notes due 2043 priced at 99.381 to yield 5.417%, or Treasuries plus 165 bps. The notes were talked at a spread in the 170 bps area.

China Construction Bank, BofA Merrill Lynch, Bank of China, Mizuho Securities and ICBC were the bookrunners for the dollar notes.

Sinopec sells euro bonds

Sinopec's new deal also included €550 million 2 5/8% notes due 2020 that priced at 99.276 to yield 2.74%, or mid-swaps plus 105 bps. The bookrunners for those notes were Citigroup, JPMorgan, HSBC, Societe Generale and Goldman Sachs.

The proceeds will be used for the general corporate purposes of overseas businesses and to refinance existing indebtedness.

The notes were issued by Sinopec Group Overseas Development (2013) Ltd.

Franshion sells notes

Hong Kong-based real estate company Franshion Properties priced a $300 million issue of 5 3/8% notes due 2018 at par to yield 5 3/8%, a market source said.

The company's wholly owned subsidiary, Franshion Brilliant Ltd., was the issuer.

RBS, Deutsche Bank, HSBC, Standard Chartered Bank and Goldman Sachs were the joint lead managers for the Regulation S offering.

The proceeds will be used to refinance debt and for working capital and general corporate purposes.

Al Khalij does deal

Qatar-based lender Al Khalij Commercial Bank priced a $500 million issue of 3¼% notes due 2018 at 99.575 to yield mid-swaps plus 180 bps, a market source said.

The notes were talked in the mid-swaps plus 195 bps area.

BNP Paribas, HSBC, QNB Capital and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The final book was $3.5 billion from 230 orders, with 42% from the Middle East, 37% from Europe, 18% from Asia and 3% from the offshore United States.

Fund managers picked up 52%, banks 28%, insurers 10% and private banks 10%.

"Net-net, a decent effort," a London-based trader said. "This deal, in turn, saw other recent deals trade a little on the heavy side."

New notes near re-offer

Prior to pricing on Wednesday, the new Al Khalij Commercial Bank notes due 2018 were trading up 40 cents on the bid side and 60 cents on the offer side in the gray market, a trader said.

Later in the morning, the notes were spotted up 15 cents on the bid side and 35 cents on the offer side in the gray market.

After pricing at 99.575, the notes moved to 99.73 bid, 99.93 offered, he said. Then they moved to 99.70 bid, 99.83 offered before clocking in at 99.35 bid, 99.65 offered.

"A few people got a little ahead of themselves on this one," he said. "Once the allocations came out, traffic steadily moved down."

More and more sellers emerged throughout Wednesday's session.

"Good size went through between 99.55 and 99.60, and she closes 99.65 bid, 99¾ offered," he said. "So not such a bad effort. However, there were plenty of loose bonds around for a $3.5 billion book, versus a $500 million issue."

Marco Polo Marine sets talk

Singapore-based marine logistic group Marco Polo Marine set guidance at 5¾% for its upcoming issue of Singapore dollar-denominated notes due 2016, a market source said.

DBS Bank and United Overseas Bank are the bookrunners for the Regulation S deal.

And Russia-based lender Home Credit & Finance Bank gave initial price guidance in the 10½% area for its dollar-denominated issue of notes due in 7½ years.

Citigroup, Sberbank and UBS are the bookrunners for the Rule 144A and Regulation S deal.

Emirate's deal trades

The new issue of notes from the Emirate of Ras al Khaimah - $500 million 3.297% notes due in 2018 that priced at par to yield mid-swaps plus 175 bps - started Wednesday at 100¾ before settling in at 100¼ bid, 100.40 offered, a trader said.

This followed Tuesday's high print of 100 7/8.

Al Hilal Bank, Citigroup, Mashreqbank, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S-registered deal.

Sabic bonds nearly flat

Saudi Arabia-based Saudi Basic Industries Corp.'s (Sabic) $1 billion 2 5/8% five-year notes that priced at 99.449 were seen at 99.06 bid, 99.31 offered on Wednesday, a trader said.

On Tuesday the notes opened at 99.03 bid, 99.33 offered.

The bonds came to the market at a spread of Treasuries plus 130 bps via Citigroup, HSBC Securities, Mizuho Securities and RBS Securities Inc. in a Regulation S deal.

Lat-Am sovereigns tighten

Looking to Latin America, bonds from the sovereign sector tightened on the day, a New York-based trader said.

Volumes were lighter and volumes were balanced, he said.

On the corporate side, the tone remained strong while some spreads widened slightly on names like Brazil-based Vale SA, another New York-based trader said.

"Most non-spread, high-grade credits again are ticking higher and feel like they are on solid footing," he said. "Peruvian corporates and banks managed to take another leg higher on low overall volumes, as sourcing is becoming hit or miss now."

Banks from Colombia were mostly flat but other corporates managed small gains, he said.

Ukraine in focus

Ukraine-based Naftogaz was under the microscope at mid-week as bondholders continued to wait for the coupon payment that was due on Sept. 30, said Svitlana Rusakova of Dragon Capital.

The coupon was expected to be paid at some point on Wednesday. The grace period ends on Thursday.

The sovereign's Finance Ministry announced that the delay was due to the freezing of Naftogaz's accounts but that the payments would be transferred soon.

"Naftogaz and the sovereign curve were once again lower," she said. "The short end underperformed the long end."

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