Korea Railroad, Anton Oilfield, Peru's San Miguel sell notes; Vneshprombank, Cofco ahead

By Christine Van Dusen

Atlanta, Oct. 30 - Korea Railroad Corp., China's Anton Oilfield Services Group and Peru's San Miguel Industrias PET SA sold notes on Wednesday as the Federal Open Market Committee made the expected decision to continue its bond-buying program.

Prior to Wednesday's meeting of the committee, bonds such as those from Brazil's Petrobras International Finance Co. tightened as much as 10 basis points before giving back about 4 bps after the FOMC meeting.

"Still closing strong," a New York-based trader said.

Brazil's Odebrecht saw its 2022s and 2042s get some attention in trading, while Peruvian banks held strong on the bid side. And Chilean corporates outperformed and bonds from Chile traded higher and tighter, he said.

Bonds from the Middle East and North Africa showed good liquidity with firm prices amid somewhat limited activity, a London-based trader said.

"Turkish banks are seeing demand from private banks," she said.

The 2017s, 2018s and 2019s from Turkey's Turkiye Is Bankasi AS (Isbank) proved especially popular on Wednesday, she said.

But the recent issue of notes from Qatar's Al Khalij Commercial Bank - $500 million 3¼% notes due 2018 that priced at 99.575 - traded Wednesday at 99.875, 5 bps wider on the week, another trader said.

On the new deal front, Korea Railroad sold $315 million 1½% notes due 2019 at 99.673 to yield 1.558%, or mid-swaps plus 72 bps via BNP Paribas, Credit Suisse and UBS.

And several other issuers took steps toward bringing deals to the market, including Thailand's Ananda Development PCL, China's Cofco Corp., Korea East-West Power Co. Ltd., Mexico's Fresnillo plc and Russian Foreign Economic Industrial Bank (Vneshprombank).

New deal from Anton Oilfield

China-based Anton Oilfield Services priced a $250 million issue of 7½% notes due 2018 at par to yield 7 ½%, a market source said.

Citigroup, Morgan Stanley, RBS and Guotai Junan were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Based in Beijing, Anton Oilfield provides technical oil and gas field development services.

Peruvian corporate issues bonds

Peru's San Miguel Industrias PET priced $200 million 7¾% notes due 2020 at par to yield 7¾%, a market source said.

The notes priced tighter than talk, set in the 9% area.

BofA Merrill Lynch and Citigroup were the bookrunners for the Rule 144A and Regulation S deal.

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

The issuer is a marketer of PET containers and is based in Lima.

Ananda to issue notes

Thailand's Ananda Development PCL is looking to issue perpetual notes denominated in renminbi, a market source said.

No other details were immediately available on Wednesday.

In February the company announced its board of directors had approved up to 3 billion baht of debentures.

The real estate developer is based in Bang Phli, Samut Prakan, Thailand.

Cofco on road

Cofco subsidiary Cofco (Hong Kong) Ltd. is on a roadshow for a dollar-denominated issue of Regulation S notes, a market source said.

HSBC, JPMorgan and UBS are the joint global coordinators. HSBC, JPMorgan, UBS, Bank of China International, ICBC (Asia), Standard Chartered Bank, Deutsche Bank and Citic Securities are the joint bookrunners and joint lead managers.

The roadshow began on Wednesday and will travel to Hong Kong, Singapore and London.

The issuer is a food-processing company based in Beijing.

Roadshow for Korean utility

Korea East-West Power has mandated BofA Merrill Lynch, Citigroup, Credit Suisse, HSBC and UBS to arrange a Rule 144A and Regulation S roadshow for the week of Nov. 4, a market source said.

And Mexico mining company Fresnillo tapped Citigroup, Deutsche Bank and JPMorgan to lead a roadshow for a possible Rule 144A and Regulation S issue of notes.

The roadshow will begin on Friday.

Vneshprombank sets tenor

Russia's Vneshprombank has set the tenor at three years for its upcoming issue of dollar-denominated notes, a market source said.

Otkritie Bank and Raiffeisen Bank International are the bookrunners for the Regulation S-only deal.

A roadshow began on Tuesday.

"Considering its debut nature, lack of track record in the market, relatively short duration and potentially small deal size, we would expect a considerable concession above other comparable bonds such as Credit Bank of Moscow," a London-based analyst said. "We believe VPB is better fundamentally compared to [Tinkoff Credit Systems] and [JSC Russian Standard Bank]. So considering the new issue premium, the new issue should likely come at a small premium to flat with their existing curves."

Russian Standard Bank's existing 2016s are currently offered at just below z-spread plus 700 bps, she said.

Rosneft: 'impressive' earnings

In other trading from the Russian corporate space, buyers were seen on Wednesday for OAO Rosneft's 2022 following the company's earnings results, a trader said.

"Rosneft reported an impressive set of third-quarter results yesterday," she said.

She recommends the company's 2022 bond, which last week "offered an impressive spread of Gazprom's 2022s," she said. "We still feel this trade is attractive, especially on the back of these strong results."

The 2030 and 2042 bonds from Russia also saw buyers on Wednesday, as did the 2021 euro-denominated bonds from Russian Railways.

Naftogaz owes Gazprom

JSC Naftogaz of Ukraine remained in focus at mid-week after the energy company failed to pay a bill to Russia's OAO Gazprom by the deadline of Oct. 1.

Naftogaz's tardiness could lead to sanctions from Gazprom.

"News of Naftogaz's overdue bill to Gazprom did some damage to the sovereign curve yesterday," said Svitlana Rusakova of Dragon Capital. "A few fairly defensive bids were hit and the sovereign stood 1 point to 1½ points lower for most of the day."

On Wednesday Ukraine's energy and coal industry minister said the bill would be paid before the end of the month.

Russia takes action

Meanwhile, Russian Prime Minister Dmitry Medvedev ordered the government and Gazprom to draft laws restricting gas deliveries to delinquent customers, according to a report from Commerzbank.

"Non-payments [impact] the situation at Gazprom, and the counterparties must take that seriously," the report said. "Non-payment for gas deliveries exceeds RUB 100 billion."

Medvedev is calling for another mechanism of settlement, such as advance payments, the report said.

Earlier this month Naftogaz was under scrutiny for delaying a coupon payment. That $21.7 million payment came through On Oct. 9, allowing the company to avoid a default on its debt as well as some of Ukraine's sovereign bonds.

The sovereign's Finance Ministry said that delay was due to the freezing of Naftogaz's accounts.

Middle East in focus

In early trading from the Middle East, bonds from Bahrain were solid, a London-based trader said. But overall liquidity was thin.

"Plenty of prices and liquidity around," he said. "Prices are generally holding fairly well ahead of Federal Open Market Committee meeting."

Some perpetual notes from the Gulf region were popular, he said, with particular interest shown for Abu Dhabi Islamic Bank and Dubai Islamic Bank bonds.

And "decent size" was traded for Majid Al Futtaim Holding LLC's (MAF) 2019s.

"Dubai Electricity and Water Authority 2018s are doing work around par again," he said. "I continue to think Qtel International's 2028 is a good value on the curve."

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