Unit of South Africa's Anglogold, State Bank of India sell bonds; VTB sets price talk

By Christine Van Dusen

Atlanta, July 25 - State Bank of India and a unit of South Africa's Anglogold Ashanti Ltd. printed notes on a Wednesday marked by mixed investor sentiment as Spanish bond yields remained high and an E.U. official recommended expanding the European Stability Mechanism's bailout powers.

Also on Wednesday, Germany and the United Kingdom released soggy economic data, with the latter showing that gross domestic production dropped during the spring.

"With such an abundance of risk, markets have been making sharper and sharper distinctions between 'safe haven and 'risky' assets," according to a report from Barclays Capital. "Although not a real substitute for safe-haven assets like U.S. Treasuries, global credit has inherited some safe-haven properties. In this context, the valuation gap between credit and riskier asset classes seems less problematic than historical comparisons might suggest."

Among the standouts in the secondary market were Qatar funding vehicle SoQ Sukuk A QSC's recent 2023 notes and Abu Dhabi-based International Petroleum Investment Co.'s 2041 bonds.

"It's an amazing effort at the long end," a London-based trader said.

In its new deal, subsidiary AngloGold Ashanti Holdings sold $750 million 5 1/8% notes due Aug. 1, 2022 at 99.398 to yield 5.203%, or Treasuries plus 380 basis points, a market source said.

The notes priced tighter than talk, set at about Treasuries plus 400 bps.

Barclays Capital, Citigroup, HSBC and Scotiabank were the bookrunners for the Securities and Exchange Commission-registered deal.

Proceeds will be used for general corporate purposes, including the funding of capital expenditures and the development of the company's project pipeline.

Indian lender prices notes

Also on Wednesday, State Bank of India priced $1.25 billion 4 1/8% five-year notes at 99.14 to yield 4.318%, or Treasuries plus 375 bps, a syndicate source said.

Initial talk was set in the Treasuries plus 400 bps area and was tightened to the area of 380 bps over Treasuries.

Citigroup, Barclays, Bank of America, Deutsche Bank, UBS and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

VTB gives guidance

In other deal-related news, Russia-based lender VTB Bank set price guidance at 9½% to 9¾% for its planned benchmark-sized issue of perpetual notes, a market source said.

Citigroup, UBS Investment Bank and VTB Capital are the bookrunners for the notes, which are callable in 10½ years.

Market sources were also talking about a possible eurobond from City of Kiev, $1 billion of notes from Russia's Gazprom and a KZT 10 billion issue of bonds from Kazakhstan-based pharmaceutical company Chimpharm JSC.

Access down, Jafza up

In trading, the recent issue of $350 million 7¼% notes due 2017 from Nigeria's Access Bank plc that priced at par was seen Wednesday at 98 bid, 99 offered.

Citigroup and Goldman Sachs were the bookrunners for the Rule 144A and Regulation S deal.

And the recent deal from Dubai's Jebel Ali Free Zone (Jafza) - a $650 million issue of 7% notes due 2019 that also priced at par - was trading at 105 on Wednesday.

"That's up five bps, month-on-month," a trader said. "Solid."

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD, National Bank of Abu Dhabi and Standard Chartered were the bookrunners for the Regulation S deal.

Qatar sukuk sees interest

The $4 billion sukuk issue from SoQ Sukuk was also fairly active on Wednesday.

The deal included $2 billion 2.099% notes due 2018 and $2 billion 3.241% notes due 2023 that both priced at par.

The 2018 notes opened Wednesday at 100.20 bid, 100.45 offered and were later seen at 100.35 bid, 100.45 offered. The 2023 notes started the day at 101.65 bid, 101.95 offered before trading at 101.85 bid, 102.05 offered.

"Good interest in the 2023s," a London-based trader said. "The 2023s printed above 102 in the afternoon and the 2018s are holding steady, last printing at 100.40. The 2018s, in this global yield environment, will continue to hold OK, although without the duration of the longer bonds."

Barwa Bank, Deutsche Bank, HSBC, QInvest and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Middle East in focus

In other trading from the Middle East, DPWorld's 2037 bonds, which last week were 73 bps tighter on the month at 104.50 bid, 105 offered, were quoted Wednesday at 103.50 bid, 104.50 offered.

The 2017 notes from Saudi Electric Co. that traded last week at 101.62 bid, 102.12 offered were unchanged from those levels on Wednesday.

The 2019 notes from Abu Dhabi-based Dolphin Energy were trading at 111.50 bid, 112.25 offered on Wednesday while its 2021s were seen at 111.75 bid, 112.25 offered.

"Emaar Properties' 2019s were almost two points lower," a trader said. "But generally there's no meaningful selling, it seems, on Qatari, Abu Dhabi and Saudi Arabia lower-beta names."

TAQA sees buyers

A trader noted buying of Abu Dhabi National Energy Corp. (TAQA) bonds, particularly the 2036 bonds.

"That trades with a 123 handle now," he said. "IPIC's 2041s are now 129.50, bid side."

Bahrain's 2022 bonds struggled a bit on Wednesday, he said.

"The last trade was at 100, or almost 30 wider versus launch spread," he said. "Granted, this bond cannot keep up with what U.S. Treasuries have done since launch."

Dar al-Arkan's 2015 notes were trading at about 108.

"One or two brokers posted trades at 108.50 today, but that was either a high lift or a blatant lie," he said.

Majid Al Futtaim ticks up

The $500 million issue of 5¼% seven-year notes from Dubai's Majid Al Futtaim that came to the market at par was trading Wednesday at 100.25 bid, 100.50 offered.

"Feels like a few bonds on the offer side," a trader said.

Dubai's sovereign bonds were holding steady, he said.

"What a transformation in that credit," he said. "If you'd told me two or three years ago that the Spanish 10-year would be at 7½% and the Dubai 2020s would be bid at 5½%, I would've said we need to have a bet.'"

Looking to South Africa, five-year credit default swaps were trading Wednesday at 154 bps mid, he said.

"Sovereign bonds are steady," he said.

Aleesia Forni contributed to this article.

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