Qtel, TAQA active in trading; Samruk-Energy, Pine deals likely to be last before holidays

By Christine Van Dusen

Atlanta, Dec. 14 - Emerging markets investors spent Friday focused on the Connecticut school shooting and mixed global headlines on what was likely one of the last semi-active trading days before the winter holidays.

Most of the trading activity focused on the recent new issues from Qatar Telecom QSC's (Qtel) and Abu Dhabi National Energy Co. (TAQA).

Among the international news to make an impact on investor sentiment: Standard & Poor's downgraded the outlook for the United Kingdom, business confidence declined in Japan, and stocks from China rallied.

The Markit Itraxx SovX index spread opened 1 basis point wider, as did the corporate index.

"Russian corporates have been the real outperformers the last week, with the Evraz Group curve previously unloved on fundamentals now 47 basis points to 62 bps tighter on the week," a London-based analyst said. "OAO Severstal's mid-curve is 42 bps to 48 bps tighter. Vimpelcom is 31 bps to 35 bps tighter."

Bonds from Ukraine rebounded, moving tighter on the approval of a new prime minister.

"Sovereign eurobonds continued to tighten, adding another ¼ point to ½ point on the long end of the curve," said Svitlana Rusakova of Dragon Capital.

The 2017s were seen trading up at 108 bid, 109 offered while the 2022s were quoted at 100½ bid, 101½ offered.

"Corporate names closed fairly unchanged," she said.

The primary market was quiet, save for the new deals from Kazakhstan's JSC Samruk-Energy and Brazil's Banco Pine SA.

"Given the new issue supply has turned off for now and there are a few funds putting cash to work with small inventories in the Street, you are getting some big spread moves into the end of the year," the analyst said.

Inflows climb

In other news, emerging markets bond funds saw inflows of $1.6 billion for the week ended Dec. 12, according to a report from data tracker EPFR Global.

Last week, the funds drew in $1.02 billion, up from the $804 million seen before that.

Funds with local currency mandates outpaced those with hard currency mandates by a ratio of four to three, EPFR said.

Samruk-Energy prints notes

In its new deal, Kazakhstan's Samruk-Energy priced a $500 million issue of 3¾% notes due Dec. 20, 2017 at par to yield 3¾%, a market source said.

The notes priced in line with talk, set at the 3¾% area.

RBS and Sberbank CIB were the bookrunners for the Regulation S deal.

The proceeds will be used to fund the company's capital expenditure program.

Samruk-Energy is owned by the state through utility, rail and postal conglomerate JSC Samruk-Kazyna.

Pine does deal

Brazil-based lender Banco Pine priced an issue of UF 1.5 million 6% inflation-linked, Chilean domestic bonds due Dec. 10, 2017 to yield 6¾%, a market source said.

BTG Pactual, Celfin and JPMorgan were the bookrunners for the deal.

And Ghana is considering a $750 million issue of notes for 2013, a market source said.

The proceeds will be used to refinance the sovereign's outstanding $750 million 2017 bond.

Qtel oversubscribed

The final book for Qtel's $1 billion 3¼% notes due Feb. 21, 2023 was $13 billion with 520 accounts involved, a market source said.

The notes priced at 98.721 to yield 3.399%, or Treasuries plus 175 bps.

About 32% of the orders came from Europe, 30% from the United States, 20% from Asia and 18% from the Middle East.

Funds picked up 62%, agencies and pensions 12%, insurers 10% and private banks 4%.

Qtel notes a 'blowout'

In trading, the new Qtel notes were seen Friday at 99¾ bid, par offered, a trader said.

Earlier in the week the notes were quoted at 100.10 bid, 100¼ offered, then par bid, 100 1/8 offered.

Barclays, HSBC, Mitsubishi UFJ, Mizuho Securities, Morgan Stanley and QNB Capital were the bookrunners for the Rule 144A and Regulation S transaction.

"The Qtel 2023 deal was a blowout, with the bonds still trading 20 bps tighter from launch," the analyst said. "This re-priced the whole curve tighter."

TAQA sees movement

In other trading, TAQA's recent two-tranche issue of $2 billion notes due Jan. 12, 2018 and 2023 saw some movement during the week.

The Rule 144A and Regulation S deal included $750 million 2½% notes due 2018 that priced at 99.483 to yield Treasuries plus 200 bps. Those notes were seen Wednesday at 100½ bid, 100.62 offered. On Friday they traded at 100½ bid, 100.65 offered.

Good demand for TAQA

The second tranche of TAQA's $1.25 billion 3 5/8% notes due 2023 priced at 99.404 to yield 210 bps over Treasuries. Those notes traded Wednesday at 100.87 bid, 101.12 offered. On Friday they were seen at 101.20 bid, 101.60 offered.

BNP Paribas, Citigroup, HSBC and Standard Chartered were the bookrunners for the deal.

"There is good demand for TAQA bonds," a London-based market source said.

Also on Friday, Lebanon-based lender BankMed's $500 million 5 3/8% notes due Dec. 14, 2017 saw two-way activity, a trader said.

The notes priced at 99.46 to yield 5½%, in line with talk, via Deutsche Bank in a Regulation S transaction.

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