Turkey prices sukuk; Gazprombank, CAF, Bangkok Bank do deals; EM spreads widen a touch

By Christine Van Dusen

Atlanta, Sept. 18 - Turkey priced its first-ever issue of Islamic bonds on a Tuesday that saw two-way action on most emerging markets bonds and slightly wider spreads as investors continued to take chips off the table.

"Supply would be welcome," a London-based trader said.

Several issuers answered that call on Tuesday, with Turkey's deal accompanied by new notes from Russia's Gazprombank, Bangkok Bank PCL and Venezuela's Corporacion Andina de Fomento (CAF). Transactions also are expected from Brazil's Petroleo Brasileiro SA (Petrobras), Paraguay and Brazil's BTG Pactual SA.

In the secondary market, some names climbed while others lagged, a trader said.

"It was a mixed bag," he said.

Names from Latin America, Dubai and Bahrain were among the solid performers on Tuesday.

In its new deal, Turkey sold $1.5 billion of sukuk due March 26, 2018 at a profit rate of 2.803%. The Rule 144A and Regulation S notes - via Citigroup, HSBC and Kuwait Liquidity House - priced at par to yield mid-swaps plus 185 basis points.

Gazprombank priced its RUB 15 billion issue of 8.617% notes due Dec. 15, 2015 at par with bookrunners Barclays, Citigroup, HSBC and GPB Financial Services in a Regulation S deal.

And Bangkok Bank priced a two-tranche issue of $1.2 billion notes due in 5½ and 10 years via Morgan Stanley in a Rule 144A and Regulation S deal.

The 51/2-year tranche totaled $400 million and priced at a yield of 2.816% or Treasuries plus 220 bps. The notes were talked at Treasuries plus 235 bps area.

The 10-year notes totaled $800 million and were priced to yield 3.951%, or Treasuries plus 215 bps. The notes were talked at the Treasuries plus 237.5 bps area.

CAF prints bonds

In another new deal, the new $407 million add-on to CAF's 4 3/8% notes due June 15, 2022 came to the market on Tuesday at 107.907 to yield 3.412%, or Treasuries plus 160 bps.

Deutsche Bank, Goldman Sachs and HSBC were the bookrunners for the Securities and Exchange Commission-registered deal.

The notes will form a single series with the $1.09 billion notes due 2022 issued on June 15.

Proceeds will be used for general corporate purposes, including the funding of lending operations.

In other deal-related news, Brazil's Petrobras could issue euro-denominated notes before the end of the year, a market source said.

Paraguay, BTG Pactual roadshows

Paraguay will set out on a roadshow on Thursday and Friday in New York and Boston with arranger Citigroup, a market source said.

And BTG Pactual mandated Bradesco BBI, BTG Pactual, Citigroup and Deutsche Bank for a dollar-denominated issue of notes, according to a market source.

The Rule 144A and Regulation S deal will be marketed during a roadshow on Wednesday and Thursday of this week in London, Boston, New York and Los Angeles.

Stronger day for Latin America

In trading of Latin American assets, volumes improved from Monday's ho-hum session.

"We see a clearly firmer, stronger tone so far this morning as spreads have come in strongly," a New York-based trader said. "When you attribute the higher Treasury prices into it, we are left with spread-based credits higher by at least 1¼ points and closer to 2 points on the long end."

Volumes and liquidity were somewhat thin. But Brazil's Vale SA managed to stand out, with its 2022s and 2042s moving higher, the trader said.

Mexichem trades up

Also from Latin America, the recent $1.15 billion notes due 2022 and 2042 from Mexican chemical company Mexichem SAB de CV moved up in trading on Tuesday.

The upsized deal, via Citigroup, HSBC, JPMorgan and Morgan Stanley, included $750 million 4 7/8% 10-year notes that priced at 99.206 to yield 5%.

The Rule 144A and Regulation S transaction also included $400 million 6¾% 30-year bonds that priced at par.

The recent $750 million issue of 3 7/8% notes due 2022 that Banco Santander Chile SA priced at 98.338 to yield 4.079% were unchanged on Tuesday, a trader said.

Santander, Deutsche Bank, Goldman Sachs and JPMorgan were the bookrunners for the Rule 144A and Regulation S transaction.

Minerva bolstered by upgrade

In more news from Latin America, Minerva Holdings' notes got a boost from Moody's Investor Service's upgrade from stable to positive.

The company's 2019 notes were quoted at 111.50 bid, a level not seen since early last year, the New York-based trader said.

"Paper from Marfrig Alimentos and JBS Friboi continue to see better bids, and sourcing paper in size is not easy," he said. "Electrobras paper continues to get slaughtered. The 2021s are now trading at 110, lower by almost 4 points since the huge tariff reductions announced last week."

Possible Dubai deal ahead

Some market-watchers were whispering about possible supply ahead from Dubai, which impacted sovereign and corporate paper on Tuesday.

"Dubai was fairly well offered most of the day after a very good monthly performance and with some rumblings of supply," a trader said.

Dubai Electricity and Water Authority, in response, saw its 2020s move to 117.375 on the bid side after Friday's level of 118.75.

International Petroleum Investment Co. (IPIC)'s 2041s were trading north of 130 on Tuesday morning. And Bahrain paper was scarce, with its 2022s remaining at the 106.25 bid, 107 offered level.

"Bahrain is still trading well," he said.

Middle East in focus

Also from the Middle East, the 2018 sukuk from Qatar was a laggard on Tuesday, a London-based trader said.

The notes have moved 20 bps wider and were quoted Tuesday at 99.95 bid, 100.15 offered.

"The 2042s are 20 better, the 2022s unchanged and even the 2014s and 2015s are slightly tighter on the month," he said.

Ras al Khaimah's 2014s traded Tuesday at 110.37 bid, 111.37 offered while its 2016s were seen at 109 bid, 110 offered.

"Not liquid, but has some support, of late," he said. "Elsewhere there was two-way interest in Majid al Futtaim Holdings, Emaar Properties and Jebel Ali Free Zone."

Dolphin Energy performed well on Tuesday, he said, with its 2021 notes about 33 bps tighter on the month and trading with a 115 handle.

Nigerian banks in demand

Looking to Africa, some paper from Zambia was spotted and demand was noted for Nigeria's GTB Finance BV and Access Bank.

Access Bank's 2017s opened Tuesday at 104.25 bid, 105 offered and were later seen at 104.50 bid, 105.50 offered after pricing at par.

"The free float on Access Bank is dropping daily, if you ask me," a trader said. "Street buyers on Gabon, Namibia and Ghana around."

Sovereign bonds from South Africa suffered a bit. "Eskom Holdings marked lower in sympathy," he said.

Investec's 2017s opened at 98.25 bid, 99.25 offered, unchanged on the week. The notes, which are attracting a little bit of interest, priced at 99.775.

Sberbank widens

From Russia, Sberbank's curve moved wider, with cash bonds about 12 bps to 15 bps wider on Tuesday, a trader said.

From Kazakhstan, Kazakhstan Temir Zholy's 2042s were quoted at 120.75 bid, 121.75 offered, off the highs of the previous week.

Bonds from Ukraine continued to inch higher, with the sovereign's 2020s strengthening this week to 101.50 bid, 102.50 offered and its 2021s to 102 bid, 103 offered, according to Svitlana Rusakova of Dragon Capital.

Sun Hung Kai oversubscribed

The final book for Hong Kong-based Sun Hung Kai Properties' $350 million issue of 6 3/8% notes due Sept. 24, 2017 was $1.3 billion from about 100 investors, a market source said.

The notes priced at 99.684 to yield 6.45% via Standard Chartered and UBS in a Regulation S-only deal.

About 91% of the orders came from Asia and 9% from Europe. Private banks accounted for 48%, banks 24%, fund managers 23% and corporates and others 5%.

Korea Finance in demand

Also oversubscribed was the recent $300 million increase of Korea Finance Corp.'s 2¼% bond due 2017. Those notes attracted about $1.4 billion in orders from 62 investors.

About 50% came from Asia, 14% from Europe and 36% from the United States.

Asset and fund managers picked up 65%, banks 16%, insurance companies 10%, public institutions 6% and private banks 3%.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.