Lebanon, State Bank of India, Mriya Agro, EP Energy sell notes; EM bond funds see inflows

By Christine Van Dusen

Atlanta, April 12 - Lebanon, State Bank of India, Ukraine's Mriya Agro Holding Public Ltd. and Czech Republic-based energy producer EP Energy sold notes on Friday as small buying was noted for Dubai Islamic Bank's perpetual notes and bonds from Dubai and Saudi Electricity Co.

After a week of primarily tighter spreads, the Markit iTraxx SovX CEEME ex-EU index on Friday moved wider by 3 basis points, at 192 bps over Treasuries. The corporate index narrowed by 1 bp to Treasuries plus 217 bps.

The recent $600 million issue of 3¾% notes due April 15, 2018 that Turkey's Turkiye Vakiflar Bankasi TAO (Vakifbank) priced at 99.432 to yield mid-swaps plus 300 bps traded up on Friday at 1001/2.

"Turkey's long end tested the highs, with the 2043s reaching 102," a London-based analyst said.

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

Meanwhile, emerging markets bond funds saw inflows of $713 million for the week ended April 10, according to a report from data-tracker EPFR Global.

This was the 44th consecutive week of inflows for the asset class.

"Early April saw investors around the world digesting the implications of the Bank of Japan's decision to double the country's monetary base in an effort to banish deflation by 2015," the report said. "The BOJ's program has raised hopes for Japan's economic growth, fueled expectations of stronger Japanese investor demand for asset classes ranging from Eurozone debt to US real estate and rekindled fears that European and emerging Asian exporters will see their export competitiveness eroded by a weaker yen."

This raises the expectation that Japanese investors will turn to hard-currency debt from European sovereign and emerging markets in a hunt for yield, the report said.

That "helped boost flows into Europe bond and emerging markets hard-currency bond funds," the report said.

Lebanon sells notes

In its new deal, Lebanon priced a $1.1 billion two-tranche tap of its notes due in 2023 and 2027 in a Regulation S deal, a market source said.

The transaction included a $600 million increase of the sovereign's 6% notes due Jan. 27, 2023, which priced at 98.882 to yield 6.15%, matching talk.

The issuer also printed a $500 million increase of its 6¾% notes due Nov. 29, 2027 at 100.451 to yield 6.7%. The yield matched talk.

Fransa Invest Bank, Natixis and Standard Chartered were the bookrunners for the Regulation S deal.

Indian bank prints bonds

State Bank of India priced a $1 billion issue of 3¼% notes due April 18, 2018 (Baa2/BBB-/) at 99.904 to yield 3.271%, or Treasuries plus 255 bps, a market source said.

The notes priced tighter than talk, set at Treasuries plus 275 bps.

BNP Paribas, Citigroup, Deutsche Bank, HSBC, JPMorgan and SBI Capital Markets were the bookrunners for the Rule 144A and Regulation S deal.

State Bank of India is based in Mumbai.

Mriya Agro does deal

Ukraine-based agriculture business Mriya Agro sold $400 million 9¾% notes due April 19, 2018 at 98.835 to yield 9¾%, a market source said.

The notes were talked at a yield in the 9¾% area.

Citigroup, Credit Suisse, Goldman Sachs and Sberbank were the bookrunners for the Rule 144A and Regulation S deal.

New issue from EP Energy

Czech Republic-based energy producer EP Energy sold €600 million notes due in 2018 to yield 4 3/8%.

The notes were talked at a yield in the 4 5/8% area.

The company was initially expected to issue two tranches of notes but responded to investor demand for one larger tranche, the market source said.

Proceeds will be used to repay existing debt.

No other details were immediately available on Friday.

Eurasia Drilling prices notes

These new deals followed the late-Thursday pricing of Russia-based Eurasia Drilling Co. Ltd.'s $600 million issue of 4 7/8% notes due April 17, 2020 at par to yield 4 7/8%, a market source said.

The notes were talked at a yield in the low- to mid-5% area.

BofA Merrill Lynch, Goldman Sachs and Sberbank were the bookrunners for the Rule 144A and Regulation S deal.

Exillon Energy sets talk

Russia's Exillon Energy plc set initial price talk in the 8% area for a dollar-denominated issue of five-year notes, a market source said.

HSBC and VTB Capital are the bookrunners for the Rule 144A and Regulation S deal.

Exillon is a Urai, Russia-based oil exploration company.

Polyus Gold roadshow ahead

Polyus Gold International Ltd. will set out on April 15 for a roadshow to market a dollar-denominated issue of notes, a market source said.

No other details were immediately available on Friday.

London-based Polyus is a gold producer with mines in Russia and Kazakhstan.

Russian issuers advance deals

Russia's OJSC Alfa Bank will hold investor meetings starting April 15 for a ruble-denominated issue of notes, a market source said.

Russian Railways set initial talk for its euro-denominated issue of notes due in eight years at mid-swaps plus 220 bps to 230 bps, a market source said.

Societe Generale, Natixis, RBS and VTB Capital are the bookrunners for the deal.

And Russian potash producer Uralkali has set a roadshow for a dollar-denominated issue of notes.

Evraz gives guidance

Russia-based steel producer Evraz Group SA gave initial guidance in the 6¾% area for a dollar-denominated issue of notes, a market source said.

This offers "a small premium over the existing curve," the London analyst said. "This new issue, if successful, will alleviate pressure from refinancing and will certainly improve liquidity and debt maturity profile. However, given the lack of visibility for the business and credit metrics, the substantial leverage and the lack of any covenants to protect investors, we remain cautious on the credit."

Friday also saw the company release its financial results for fiscal year 2012 and outlook for 2013.

"Management's outlook was broadly cautious, with expectations of flat steel and iron ore volumes for 2013," she said.

Koc Holding in focus

One trader was keeping an eye out for Turkey-based Koc Holding's dollar-denominated issue of notes, which is being marketed during a roadshow that began on Friday.

"Given the quality of the credit and its blue chip status, we believe it will be a much sought-after issue, offering exposure to the highest credit profile in the credit universe of Turkey," she said. "As such, we could see the issue coming tight to the sovereign."

BofA Merrill Lynch, BNP Paribas, Citigroup and Deutsche Bank are the bookrunners for the deal.

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