Chinese, Chilean banks, Evergrande price notes; spreads widen; trading 'moderately active'

By Christine Van Dusen

Atlanta, Nov. 6 - China's Evergrande Real Estate Group Ltd., China Development Bank and Banco de Chile SA sold notes on a quieter but balanced Wednesday as buyers emerged for Russian corporates like OAO Novatek and OAO Rosneft.

The Markit iTraxx SovX CEEME ex-EU index spread on Wednesday opened at 237 basis points over Treasuries, 3 bps wider than Tuesday. The corporate index, seen Tuesday at 254 bps over Treasuries, moved out to 260 bps on Wednesday.

Also on Wednesday, Russian Foreign Economic Industrial Bank (Vneshprombank) set initial talk for an upcoming deal, and roadshows were set for Russia-based lender Vnesheconombank (VEB) and Saudi Arabia-based manufacturer Sabic Basic Industries Corp. (Sabic).

"Yesterday's sell-off in U.S. Treasuries saw widening across the board after Institute of Supply Management non-manufacturing data beat estimates, but we have seen a stronger tone this morning as Treasuries have recovered," a London-based analyst said.

One trader was paying close attention to Abu Dhabi-based First Gulf Bank PJSC's $500 million issue of 3¼% notes due 2019 that priced at 99.274 to yield 3.405%, or mid-swaps plus 180 bps.

"It has dropped about 30 cents," he said early in the Wednesday session. "Textbook deal again, with five sellers for every buyer sighted."

BofA Merrill Lynch, Citigroup, Deutsche Bank, HSBC Holdings and First Gulf Bank were the bookrunners for the Regulation S-only deal.

The notes ended the European session at 99 bid, 99 1/8 offered.

"Some retail investor nibbling at reoffer," he said. "But then the loose bonds came out, pushing the bond down to 99. And 98.90 was the low trade here, intraday."

Meanwhile, perpetual notes from the Gulf region ticked higher, with demand spotted for Majid Al Futtaim Holding LLC and Abu Dhabi Islamic Bank, he said.

"Overall a moderately active day but nowhere near as active as yesterday," a trader said.

LatAm in focus

In other trading on Wednesday, Latin American sovereign bonds moved a little bit tighter on the day, a New York-based trader said.

"We continue to see better selling from accounts," he said.

Higher-beta credits from Argentina and Venezuela were unchanged to slightly lower, he said, as the Latin American space seemed to lag others in EM.

Price action for LatAm corporates remained "super choppy" for most of the day and liquidity was "challenged," another New York-based trader said.

"Spread-traded credits all meandered in their ranges," he said. "Considering the tricky liquidity, the overall market breadth is solid."

China Development sells notes

China Development Bank priced a multi-tranche issue of RMB 4.5 billion notes due in two, five and 15 years in a Regulation S deal, a market source said.

The deal included RMB 1.9 billion floating-rate notes due 2015 that priced at par to yield Hibor plus 20 bps via Standard Chartered Bank, Bank of Communications, Bank of China, CCB International and HSBC.

Another RMB 1.7 billion of 3.6% notes due 2018 priced at par to yield 3.6% with bookrunners HSBC, Bank of China, ABC International, ICBC, ICBC International and Standard Chartered Bank.

And RMB 900 million 4½% notes due 2028 priced at par to yield 4½% with Barclays, Bank of China, Bank of Communications, HSBC and Standard Chartered Bank.

Evergrande prints tap

In another new deal on Wednesday, China-based Evergrande Real Estate priced a $500 million tap of its 8¾% notes due 2018 at par to yield 8¾%, a market source said.

The pricing matched talk, set at par.

China Merchant Securities and JPMorgan were the global coordinators. China Merchant Securities, JPMorgan, Deutsche Bank, Credit Suisse and UBS were the joint bookrunners for the Rule 144A and Regulation S deal.

The original $1 billion issue priced at par to yield 8¾% with Goldman Sachs, JPMorgan, Deutsche Bank and China Merchants Securities.

The proceeds will be used to refinance existing indebtedness.

New issue from Chilean bank

Banco de Chile priced a CHF 175 million issue of 1½% notes due 2019 at 100.251 to yield mid-swaps plus 70 bps, a market source said.

BNP Paribas and Deutsche Bank were the bookrunners for the deal.

Banco de Chile is based in Santiago.

Russian Bank sets talk

Russia's Vneshprombank set initial talk in the 9% area for its upcoming dollar-denominated issue of three-year notes, a market source said.

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

The notes will be issued by VPB Funding, most likely this week.

Lippo Karawaci gives guidance

Indonesia-based developer Lippo Karawaci set initial price talk in the 11% area for its five-year issue of dollar-denominated notes, a market source said.

Credit Suisse is the global coordinator for the Regulation S deal. Credit Suisse and Raiffeisen Bank International are the joint bookrunners.

The proceeds will be used for refinancing of existing indebtedness, to fund the debt service account and for general corporate purposes.

The notes will be issued by Metropolis Porpertindo Utama.

Sabic sets roadshow

Saudi Arabia-based manufacturer Sabic has mandated Credit Agricole, ING, JPMorgan, Mitsubishi UFJ and Standard Chartered Bank to arrange a roadshow for a euro-denominated issue of notes, a market source said.

The roadshow will begin Friday and end on Nov. 12.

"Their €750 million 4½% 2013 bond matures in three weeks, so this new one will be a welcome addition to the euro universe in the Middle East and North Africa," a trader said. "Their recent 2018 dollar notes have been heavy lately, widening 25 bps since issue."

Look at comparable bonds, Sabic's could be "popular," he said. "Of course, as with everything, it all comes down to pricing."

Marketing trip for VEB

Russia-based lender VEB has mandated Citigroup, HSBC, JPMorgan and Mitsubishi UFJ Securities as bookrunners for a dollar-denominated issue of notes that will be marketed during a roadshow, a market source said.

The roadshow will begin Nov. 11 and take place in the United States and United Kingdom.

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

Transnet does deal

Late on Tuesday, South Africa's Transnet SOC Ltd. priced a ZAR 5 billion issue of 9½% notes due 2021 at par to yield 9½%, according to an announcement from the company.

Deutsche Bank was the bookrunner for the Rule 144A and Regulation S deal.

Transnet is a Johannesburg-based rail, port and pipeline company.

Cofco oversubscribed

Cofco Corp. subsidiary Cofco (Hong Kong) Ltd.'s recent two-tranche issue of $1 billion notes due 2018 and 2023 drew a total of $2.5 billion in orders from 225 accounts, a market source said.

The deal included $500 million 3% notes due 2018 that priced at 99.416 to yield 3.127%, or Treasuries plus 175 bps. About 81% of the orders came from Asia and 19% from Europe.

The second tranche of $500 million 4 5/8% notes due 2023 priced at 98.701 to yield 4.79%, or Treasuries plus 215 bps. About 88% of the orders came from Asia and 12% from Europe.

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

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