Cnooc, Apollo Tyres may issue dollar notes; some pockets of activity in EM; spreads mixed

By Christine Van Dusen

Atlanta, Aug. 14 - China National Offshore Oil Corp. (Cnooc) and India's Apollo Tyres Ltd. pondered dollar deals on a Wednesday that saw trading activity pick up for Bahrain, Kuwait's Burgan Bank SAK amid mixed spreads.

Also on Wednesday, Singapore-based Sembcorp Industries Ltd. and China-based Meiya Power Co. Ltd. reported that their recent new issues were oversubscribed.

But overall, activity was limited, as expected.

"Uneventful open with thinner-than-usual Street liquidity, if that's even possible," a New York-based trader said. "Customers are better buyers on some names, better sellers on others and seem to have little interest in duration right now."

The Markit iTraxx SovX CEEME ex-EU index spread on Wednesday narrowed by 1 basis point to 232 bps over Treasuries, while the Markit iTraxx Crossover index spread - seen Tuesday at 393 bps - widened by 7 bps on Wednesday.

"Sharp moves in US Treasuries yesterday saw us close at 2.7% following July retail sales data with the ex-auto data beating estimates," a London-based analyst said. "Yesterday also saw comments from the Atlanta Fed president that he wouldn't rule out September at all for tapering."

The tone was generally better in Asia, she said.

"Central and emerging Europe, the Middle East and Asia are largely catching up with the Treasury move," she said. "Bonds are pricing lower, about 1 bp to 5 bps wider."

Said a London-based trader, "More active than Monday but less active than Tuesday. There's paper around today, despite the spread behavior being OK in the market."

Activity for Bahrain, Burgan

There were some pockets of activity on Wednesday, a trader said.

"Plenty of short-dated, sticky bonds out there," he said.

Bahrain's 2023s were fairly active, he said. And demand was noted for Kuwait-based Burgan Bank near the 109 to 109½ level.

"This one is not really a liquid bond, so it's a rare print," he said. "We traded small size of Kipco's 2016s and 2020s and still think the latter looks OK."

SECO trades, EIB tightens

Saudi Electricity Co.'s 2043 bonds were spotted on Wednesday at 89.12 bid, 89¾ offered, the London-based trader said.

Emirates Islamic Bank's 2017s were quoted at 104 7/8 bid, 105 1/8 offered, about 55 bps tighter on the month.

"DP World's 2017s are pushing wider versus the Government of Dubai's 2017s," he said.

Qatar, perpetuals narrow

The perpetual notes from Dubai Islamic Bank were trading on Wednesday at 105 bid, 105½ offered, about 40 bps tighter on the month, the London trader said.

The notes priced at par.

"Bids are holding on Qatar," he said. "The 2042s are still bid at 107, for example. That's 15 bps tighter on the week."

Ruwais moves up

The recent 2036 notes from Abu Dhabi-based Ruwais Power Co., a consortium led by Abu Dhabi National Energy Co. (TAQA), were trading Wednesday at 102.37 bid, 103.37 offered, a trader said.

The 6% notes priced at par to yield Treasuries plus 233.3 bps with BNP Paribas, Citigroup, HSBC, Mitsubishi UFJ, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S deal.

The proceeds will be used to finance the Shuweihat 2 independent water and power project.

Ukraine holds in

Sovereign bonds from Ukraine were under pressure by mid-week but held in well in the face of Treasury moves, said Svitlana Rusakova of Dragon Capital.

The 2017s were flat or stronger, she said, while the 2020s through 2023s ticked down by as much as a ½ point.

"Unchanged in spread terms," she said.

Ukraine corporates see demand

Corporate bonds from Ukraine have been better offered so far this week, Rusakova said.

Some demand has been seen for Donbass Fuel & Energy's (DTEK) 2018s and Metinvest BV's 2018s.

The State Administration of Railways Transport of Ukraine's (Ukrzaliznytsia) 2018s saw two-way interest at 93 bid, 94 offered.

"Belarusian bonds were quiet, with the 2015s well-bid without much supply," she said.

Cnooc, Apollo Tyres ahead

Hong Kong-based oil and gas exploration company Cnooc could issue up to $3 billion of bonds, a market source said.

And India-based tire manufacturer Apollo Tyres is looking to price $1.88 billion of bonds.

No bookrunners have been officially announced, but market sources say Morgan Stanley, Deutsche Bank, Goldman Sachs and Standard Chartered Bank could be leading the deal.

OCBC sells notes

On Tuesday, Singapore's Oversea-Chinese Banking Corp. Ltd. priced $350 million notes due 2016 at par to yield bank bill swaps plus 68 bps, a market source said.

Commonwealth Bank of Australia, HSBC and JPMorgan were the bookrunners for the deal.

The issuer is a financial group based in Singapore.

Meiya Power oversubscribed

China-based power project developer Meiya Power's new issue of $350 million 4% notes due 2018 drew an order book of $740 million from 69 accounts, a market source said.

The notes priced at 99.686 to yield 4.07%, or Treasuries plus 270 bps, with Morgan Stanley, JPMorgan, CCBI, ABC International and ICBC (Asia) in a Regulation S deal.

About 95% of the orders came from Asia and 5% from Europe.

Banks accounted for 40%, asset managers and hedge funds 34%, private banks 14% and insurers and sovereign wealth funds 12%.

Sembcorp draws orders

The final book for the new issue of notes from Singapore-based Sembcorp Industries was S$320 million from more than 50 accounts, a market source said.

The engineering and construction contactor priced S$200 million 5% perpetual notes at par to yield 5% with bookrunners DBS Bank, HSBC and Oversea-Chinese Banking Corp.

About 89% of the orders came from Singapore, 10% form Hong Kong and 1% from others.

Private banks picked up 53%, others 10% and fund managers, insurers and banks 37%.

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