Bonds tighten amid difficult liquidity; Lithuania, Falabella advance deals; roadshows ahead

By Christine Van Dusen

Atlanta, Oct. 22 – Chile’s SACI Falabella and Lithuania advanced deals on Wednesday amid tighter spreads and challenging liquidity for many emerging markets bonds.

Abu Dhabi-based Dolphin Energy Ltd. LLC’s 2021s were among the bonds low on the liquidity scale, trading up at 114½, a London-based trader said.

“The bond is 16 basis points tighter on the day and the best part of 40 bps tighter on the week,” he said. “Bear in mind, weekly changes are going to show big tightening, given what we went through in the market last week.”

Meanwhile, bonds from Qatar and Bahrain saw good activity. Qatar’s 2018s traded between 101.55 and 101.65 while Bahrain’s 2044s traded at about 103 on the bid side at midday, he said.

“Perpetuals were once again a mixed bag, with sellers of Global Education Management Systems and Emirates Islamic Bank,” he said. “Two-way for Burgan Bank.”

Dubai’s Damac Real Estate Development Ltd. saw its bonds trade near 96, off the previous week’s lows but still struggling, he said.

“It’s 20 bps tighter on the week,” he said. “Plenty of action for Qatari Diar 2020s, which are the best part of 30 bps tighter on the week.”

For bonds from Latin America, Wednesday was fairly subdued, with low volumes for even the most popular credits, a New York-based trader said.

Spread-based credits like Brazil-based Petroleo Brasileiro SA were unchanged at the open but went on to tighten by about 5 bps in the belly of curve and 8 bps on the long end, he said.

Brazil-based Odebrecht SA, however, amid continuing concern about Rioforte Investments, which has been denied creditor protection.

Some Chilean corporates were firmer on Wednesday morning and paper was hard to come by for less-traded names like Colbun SA.

Ukraine in focus

Looking to Ukraine, sovereign bonds have improved slightly this week on the news that gas talks with Russia have so far been positive, said Svitlana Rusakova of Dragon Capital.

“The process is ongoing and the next round is now set for Oct. 29,” she said.

In response, “bottom-fishing bids emerged in a number of corporates,” she said.

MetInvest BV’s 2018s were “modestly stronger” while its 2015s rallied about 3 points at mid-week.

Falabella launches notes

Chile’s Falabella launched a $400 million issue of notes due in January of 2025 at a spread of Treasuries plus 215 bps, a market source said.

JPMorgan, Credicorp and Scotiabank are the bookrunners for the Rule 144A and Regulation S deal.

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

Falabella is a retail company based in Santiago.

Lithuania gives guidance

Lithuania set talk in the mid-swaps plus 115 bps area for a euro-denominated issue of 12-year notes that’s expected to price on Wednesday, a market source said.

HSBC, JPMorgan and Societe Generale CIB are the bookrunners for the deal.

ENAP on roadshow

Chile’s Empresa Nacional del Petroleo (ENAP) set out on Wednesday for a roadshow to market a possible issue of notes, a market source said.

HSBC and JPMorgan are arranging the marketing trip, which will start in Los Angeles and travel to London before concluding on Friday in New York and Boston.

ENAP is a Las Condes, Chile-based hydrocarbon exploration, production and marketing company.

Roadshow set for Yasar

Turkey’s Yasar Holding AS will start a roadshow on Thursday for a possible issue of notes with Barclays and Citigroup, a market source said.

The roadshow will start with conference calls, then travel to London, Los Angeles and New York before concluding on Oct. 29 in Boston.

A Rule 144A and Regulation S transaction is expected to follow.

Yasar is a conglomerate based in Izmir that focuses on the food and beverage, paint, agriculture and tissue paper industries.

TSKB does deal

On Tuesday, Turkey’s Turkiye Sinai Kalkinma Bankasi AS (TSKB) priced $350 million 5 3/8% notes due Oct. 30, 2019 at 99.926 to yield 5.392%, or mid-swaps plus 380 bps, a market source said.

Citigroup, Commerzbank, ING and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The final book was more than $1.3 billion.

The lender is based in Istanbul.

Add-on for Yapi Kredi

Also on Tuesday, Turkey’s Yapi ve Kredi Bankasi AS (Yapi Kredi) priced a $50 million add-on to its existing 5 1/8% notes due Oct. 22, 2019 at 100.50 to yield 5.01%, a market source said.

Commerzbank, JPMorgan, Societe Generale, Standard Chartered Bank and UniCredit were the bookrunners for the Rule 144A and Regulation S deal.

The total deal size is now $550 million.

The issuer is an Istanbul-based lender.

Korea Hydro draws orders

The final book for Korea Hydro & Nuclear Power Co. Ltd.’s new $300 million issue of 2 3/8% notes due Oct. 28, 2019 was $1.5 billion from 158 investors, a market source said.

About 35% of the orders came from Asia, 33% from Europe and 32% from the United States.

Asset managers picked up 60%, insurers 22%, banks 12% and private banks and others 6%.

The notes priced Tuesday at 99.752 to yield Treasuries plus 100 bps via BofA Merrill Lynch, Deutsche Bank, HSBC, JPMorgan and RBS Securities in a Rule 144A and Regulation S deal.

Korea Hydro is a Seoul, South Korea-based subsidiary of Korea Electric Power Corp.

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