African Bank sells bonds; issuers from China get busy; Russia's VTB Bank picks bookrunners

By Christine Van Dusen

Atlanta, July 23 - Emerging markets issuers from China took the lead on Monday, with Sound Global Ltd., China Development Bank and a unit of China Fishery Group Ltd. all planning deals.

Monday also saw an issuance from South Africa's African Bank Ltd. as the larger markets remained focused on the euro zone economic crisis.

"Ten-year Spanish yields climbed to historic highs during European morning trading on reports that six regions may ask the Spanish government for financial assistance," according to a report from Barclays Capital. "Combined with the Troika's return to Greece this week, markets will remain firmly focused on the euro area."

Continued concern about the global economy - along with moderating inflation and central bank policy easing - has revived investors' search for yield in fixed-income markets, the report said.

"Investors are extending duration in high-quality sovereigns in Group of 10 and emerging markets," Barclays said. "We recommend extending duration in EM local-currency bonds."

In its new deal, Johannesburg-based African Bank priced a CHF 150 million 4 ¾% three-year fixed-rate senior unsecured Swiss bond, according to a company release.

The bond was issued under the bank's $2 billion euro medium-term note program.

"African Bank decided to pursue an offering and listing in the Swiss market after substantial interest from Swiss investors in its U.S. dollar bonds issued under the EMTN program in June 2011 and February 2012," the company announcement said.

"The new issue has further diversified African Bank's funding base and broadened its investor universe. It is the first ever CHF issuance by a bank in Africa and the first bond to be issued by a South African institution in the Swiss public market in more than 20 years."

China Fishery whispers notes

Early price talk for the seven-year issue of dollar-denominated notes from China Fishery Group's CFG Investment SAC was set at the high 9% area, a market source said.

The deal is expected to price on Tuesday.

HSBC, Bank of America Merrill Lynch, Standard Chartered, ANZ, Jefferies, Rabobank and Deutsche Bank are the bookrunners for the deal.

Proceeds will be used to fund the expansion of the group's fishing operations in the North Pacific Ocean, repay debt and finance working capital.

The notes are guaranteed by China Fishery Group, a Hong Kong-based manager and operator of fishing vessels for coastal and deep sea industrial fishing.

Other Chinese deals ahead

Also from China, water and wastewater treatment provider Sound Global mandated HSBC and Deutsche Bank as bookrunners for a dollar-denominated issue of notes that will be marketed during a roadshow, a market source said.

The marketing trip for the Regulation S offering began on Monday.

And Beijing's China Development Bank is planning to issue renminbi-denominated notes in a two-tranche transaction.

Bank of China, BOCI, Barclays Capital, HSBC and Standard Chartered Bank are the bookrunners for the first and second tranches of Regulation S bonds. ICBC and Standard Bank are also bookrunners for the first tranche.

The notes are expected to launch following an investor luncheon on Wednesday.

Russia's VTB plans roadshow

From Russia, lender JSC VTB Bank mandated Citigroup, UBS Investment Bank and VTB Capital for a roadshow this week, a market source said.

A dollar-denominated issue of perpetual Tier 1 capital may follow, subject to market conditions.

The $750 million tap of Russia-based lender Sberbank's 6 1/8% notes due Feb. 7, 2022 that priced Friday to yield 5% attracted about $1.5 billion in orders, a market source said.

Troika Dialog was a bookrunner for the Rule 144A and Regulation S deal, which had been expected to yield about 5.06%.

About 59% of the orders came from the United States, 24% from the United Kingdom, 6% from Russia, 5% from Europe, 5% from Asia and the Middle East and 2% from other countries.

The original issue totaled $500 million and priced at par on Jan. 31 to yield Treasuries plus 432.8 basis points. From there, the issuer added on $250 million at par on Feb. 3.

Transnet deal oversubscribed

The recent issue of $1 billion 4% notes due 2022 from South African rail, port and pipeline company Transnet SOC Ltd. drew about $6.5 billion in orders, a market source said.

The notes priced at 98.855 to yield Treasuries plus 262.5 bps via JPMorgan and Standard Bank in a Rule 144A and Regulation S deal.

About 50% of the orders came from the United States, 24% from the United Kingdom, 24% from Europe and 2% from the Middle East and Africa.

Asset managers accounted for 82%, hedge funds 6%, banks 4%, insurance 4% and others 4%.

CDS trading declines

Trading in emerging markets credit default swaps totaled $218 billion for the second quarter of this year, according to a survey from EMTA, a trade association.

That is a 9% decrease from the same period a year ago, when volumes totaled $240 billion. In the first quarter of 2012, the total was $235 billion.

The decline was not surprising, given that emerging markets bond issuance dropped 45% quarter-over-quarter amid anxiety over the euro zone's troubles, the report said.

The CDS contracts on Russia-based Gazprom had the highest volume among corporate names during the second quarter, at $6 billion.

"Participants also reported $2 billion in [Petroleos Mexicanos SAB de CV] CDS trades during the quarter," the report said.

On the sovereign side, CDS trading on Brazil ranked highest, at $35 billion. Russia followed at $32 billion and Turkey at $29 billion.

Aleesia Forni contributed to this article.

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