Nigeria, Israel Electric print new notes; EM spreads narrow; Mexico's Cemex outperforms

By Christine Van Dusen

Atlanta, July 2 - The primary market on Tuesday slowly awoke from its deep sleep - with Nigeria and Israel Electric Corp. Ltd. selling new bonds - as spreads tightened and more buyers of emerging markets bonds appeared.

"A very busy day and a decent bounce in the market. The week-on-week moves look pretty impressive," a London-based trader said. "There was much more calm and much more buying. Last semblance of liquidity tomorrow ahead of the July 4 holiday."

The Markit iTraxx SovX CEEME ex-EU index on Tuesday narrowed 13 basis points to Treasuries plus 220 bps, while the Markit iTraxx Crossover index spread - seen at 467 bps on Monday - tightened to 260 bps.

"Firmer again this morning by a few bps on most spread-based credits, and they are dominating the Street volume so far," a New York-based trader said. "Awaiting the non-farm payrolls, and market participants are trying to figure out if this up-trade is for real as we continue to trade with United States rates."

One outperformer on Tuesday was Mexico's Cemex SAB de CV, which moved a few points higher.

"Tough to gauge at this point whether the majority of the off-the-run credits have re-priced higher as they lagged the spread-based credits considerably yesterday, which is not uncommon when the market creeps higher as opposed to when it gaps higher," the New York trader said. "The lack of liquidity in the off-the-runs should continue throughout this week due to the holiday."

Corporate bonds from Peru and Colombia were mostly quiet on Tuesday, with limited activity confined to such names as Bancolombia SA and Colombia Telecomunicaciones SA, he said.

"And they are light, at that," he said.

Chilean corporate bonds also saw little to no action on Tuesday, with the exception of Cencosud SA.

Qatar's Ooredoo fades

In other trading on Tuesday, Qatar-based Ooredoo QSC, formerly known as Qtel International, saw its 2043s hover near 90 before fading into the close, a trader said.

"Bahrain has definitely had some money put to work," he said. "It's tricky now, finding any sort of meaningful offer on the sovereign. And Bahrain Telecommunications has caught a bid and is the best part of 75 bps on the week better."

Qatar's 2023s were quoted Tuesday at 96 7/8 bid, 97¼ offered, about 9 bps tighter on the week.

"Even Lebanon has had a bid this morning," the London trader said. "The 2020s and 2021s are trading up."

Middle East firms up

The tone for bonds from the Middle East was, overall, firmer on Tuesday, a London-based analyst said.

"Opening very strongly, with perpetuals outperforming," she said.

The perpetual notes that Dubai Islamic Bank priced at par were seen on Tuesday at 96¾ bid, 97¾ offered, while the perpetuals from Abu Dhabi Islamic Bank, which also priced at par, moved to 99¾ bid, 100¾ offered.

"Buyers are back out to crush shorts," a trader said. "One example is Emirates' 2025s. I closed at 90¼ bid, 91¼ offered and they're opening between 92 and 94."

Dubai names narrow

Bonds from Dubai were 5 bps tighter on Tuesday while Dubai Electricity and Water Authority (DEWA) notes moved in 15 bps, a trader said.

Investors also showed interest in bonds from Majid al-Futtaim Holdings and Jebel Ali Free Zone (Jafza).

"The latter I traded with a 105 handle last week," he said. "That's closing at 108¾ bid, 109¾ offered today."

Some activity was noted for Jafza's 2019s in the 108½ to 109½ context, he said.

Turkey, Russia in focus

Bonds from Turkey were as much as 5 bps tighter on Tuesday, while corporates were up to 4 bps tighter, the London-based analyst said.

From Russia, VTB Bank released its first-quarter earnings results, which showed solid loan growth, stable asset quality and stable capital, she said.

"But overall we expect little movement on the back of these results," she said. "We have seen little activity so far in bonds."

Limited action for Ukraine

From Ukraine, sovereign bonds so far this week have been somewhat heavy, said Svitlana Rusakova of Dragon Capital.

The 2017 bonds were quoted at 99¾ with limited action, while JSC Naftogaz of Ukraine moved up to 99¾ and State Export-Import Bank of Ukraine's (Ukreximbank) 2015s remained offered, she said.

South Africa, Afrexim bounce

Looking to Africa, South Africa's 2014s were seen Tuesday at 104.15 bid, 104.45 offered, a trader said.

"South Africa sovereign paper has bounced very nicely, with five-year credit default swaps now at 215 bps," he said. "Traded some 2014s near a 1½% yield today."

And Cairo-based African Export-Import Bank's (Afreximbank) recent $500 million 5¾% notes due 2016, which priced at par, moved to 104¾ bid, 105¾ offered on Tuesday.

Commerzbank, HSBC, Mitsubishi UFJ Securities and Standard Bank were the bookrunners for the Regulation S notes.

"Afrexim has bounced back nicely," he said. "We also saw more demand for Morocco's 2022s and buyers for Eskom Holdings."

Nigeria sells bonds

In its new deal, Nigeria priced $1 billion of notes in two-tranches due 2018 and 2022 with bookrunners Citigroup and Deutsche Bank, a market source said.

The Rule 144A and Regulation S deal included $500 million 5 1/8% notes due 2018 that priced at 98.917 to yield 5 3/8%.

The second tranche of $500 million 6¾% notes due 2023 came to the market at 98.193 to yield 6 1/8%.

The proceeds will be used to finance infrastructure investments.

The new deal gives Nigeria three outstanding dollar bonds, with their previous issue of notes due in 2021 last printing at 106½ to yield 5.68%, a trader said.

"Some very useful moves on this space on largely limited volume," he said. "There is some activity."

Israel Electric prices notes

Tuesday also saw Israel Electric price a two-tranche, $300 million tap of its notes due 2018 and 2023 via bookrunners Barclays and Citigroup in a Rule 144A and Regulation S deal.

The deal included $150 million 5 5/8% notes due 2018 that priced at 101.75 to yield 5.219%. In June the issuer sold $600 million of the notes at par.

The second tranche totaled $150 million 6 7/8% notes due 2023 that priced at 100.375 to yield 6.822%. The original issue totaled $500 million notes that priced at par.

Roadshow for Naspers

In other deal-related news, South Africa-based media company Naspers Ltd. will set out on a roadshow for a possible issue of notes with Investec Bank, according to a company announcement.

The proceeds for the notes - to be issued by wholly owned subsidiary Myriad International Holdings BV - will be used for general corporate purposes, including future acquisitions and the repayment of existing credit facilities.

Eustream plans marketing trip

Slovakia's eustream as will set out on Wednesday for a roadshow to market and issue of euro-denominated notes, a market source said.

No other details were immediately available on Tuesday.

Eustream is a Bratislava, Slovakia-based gas transmission company.

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