Petrobras unit, ENAP, Hyundai unit sell bonds on upbeat day for EM assets; Qatar in demand

By Christine Van Dusen

Atlanta, Dec. 1 - Brazil's Petrobras International Finance Co., Chile's Empresa Nacional del Petroleo (ENAP) and a unit of South Korea's Hyundai Motor Co. sold notes on a Thursday that saw issuer's basking in the afterglow of the previous day's big market rally.

"It was a busy day," a trader said. "The off-the-run names were not very active, as one would expect, although a special mention goes to Bahrain, which jumped up over a point on thin volumes."

Qatar was once again in focus, with its new bonds actively trading in the secondary market.

"The 2022s are now over 20 bps tighter from issue," a trader said. "We continue to see good two-way interest along their curve."

Buyers were seen for the 2022s as well as the 2015s, and some selling for the 2017s and 2019s.

The 2015s ended the day at 104.75 bid, 105 offered while the 2017s closed at 99.75 bid, par offered. The 2019s closed at 117.75 bid, 118 offered, and the 2022s finished Thursday at 100.25 bid, 100.50 offered.

"It was a very busy day, mainly in the morning," he said.

Said another trader, "Flow-wise, things were very active again in Qatar, especially the 2017s and 2022s. We've seen the 2015s cheapen up. They are now freely offered below 105 and we've been trying to get holders to sell that to move into the 2017s."

In deal-related news, Mexico's Petroleos Mexicanos SAB de CV was planning notes, as were India's Reliance Industries and Russia's Nomos Bank, while Brazil's Votorantim scheduled an investor meeting.

Qatar notes oversubscribed

The final book for Qatar's $5 billion issue of senior notes due 2017, 2022 and 2042 was $9.5 billion from 450 orders, a market source said.

The Rule 144A and Regulation S deal included $2 billion 3 1/8% notes due 2017 that priced at 99.719 to yield 3.184%, $2 billion 4½% notes due 2022 that priced at 98.951 to yield 4.63% and $1 billion 5¾% notes due 2042 that priced at 98.928 to yield 5 7/8%.

For the five-year notes, 56% of the orders came from the Middle East and North Africa, 18% from the United States, 12% from the United Kingdom, 9% from Europe and 5% from Asia. Banks accounted for 45%, asset managers 31%, agencies 18% and insurance and pensions 6%.

For the 10-year notes, 54% of the orders came from the Middle East and North Africa, 22% from the United States, 11% from the United Kingdom, 9% from Europe and 4% from Asia. Banks accounted for 40%, asset managers 33%, agencies 14% and insurance and pensions 13%.

For the 30-year notes, 41% of the orders came from the United States, 22% from the United Kingdom, 20% from the Middle East and North Africa, 12% from Europe and 5% from Asia. Asset managers accounted for 64%, insurance and pensions 19% and banks 17%.

Middle East in focus

Also from the Middle East, Abu Dhabi National Energy Co.'s 2016s started out the day on solid footing and closed a bit heavy.

"The front end is doing OK," a trader said. "The 2014s and 2016s are tighter over the month. That 2016 is really an impressive bond."

Abu Dhabi-based International Petroleum Investment Co.'s 2021s were trading heavy. The 2021s ended the day at 95.25 bid, 95.75 offered.

"This is also weighing on the rest of the long end," a trader said. "The 2041s are doing slightly better than the 2022s and 2026s of late."

And Dubai and Dubai Water and Electricity Authority were mostly quiet.

"Although it felt like there were bids around," he said. "There were also buyers around on Emaar Properties and Emirates."

South Africa stays strong

Overall, secondary market liquidity was focused mostly on investment-grade names like South Africa, KazMunaiGaz and Gazprom.

"South Africa's sovereigns are so strong," a trader said. "Ukraine's 2020s and Vimpelcom's 2022s are the high-beta options."

Turkey saw somewhat low activity on Thursday, with the long-end sovereign bonds the relative outperformers of the day while banks drifted slightly lower, he said.

"Akbank's 2015s were the most active among the banks," he said. "We saw good two-way flow on it with interest mainly from retail investors, and it did some decent work between 96.125 and 96.375 today. They still look cheap versus the Akbank 2018s."

And Garanti Bankasi AS' 2021s started to look rich again, he said, as they traded flat to Isbank.

Petrobras sells notes

In its new deal, Brazil's Petrobras International Finance priced a €1.85 billion issue of notes due 2018 and 2022 via bookrunners BB Securities, Bradesco BBI, Credit Agricole, Deutsche Bank, HSBC and Santander, a market source said.

The deal included €1.25 billion 5% notes due March 7, 2018 that priced at 99.021 to yield mid-swaps plus 285 bps. The notes were talked at a spread of mid-swaps plus 290 bps to 300 bps.

The second tranche totaled €600 million 6% notes due March 7, 2022 that priced at 99.266 to yield mid-swaps plus 330 bps. The notes were talked at mid-swaps plus 330 bps to 340 bps.

The notes are guaranteed by Petroleo Brasileiro SA, an energy company based in Rio de Janeiro.

ENAP prints bonds

Also on Thursday, Chile-based hydrocarbon exploration, production and marketing company ENAP sold $500 million 4¾% notes due Dec. 6, 2021 at 98.321 to yield 4.965%, or Treasuries plus 285 bps, a market source said.

BBVA, HSBC, JPMorgan and Mitsubishi UFJ Securities were the bookrunners for the Rule 144A and Regulation S transaction.

Proceeds will be used to refinance existing debt.

And California-based Hyundai Capital America priced a $500 million issue of 4% notes due June 18, 2017 at 99.551 to yield 4.092%, or Treasuries plus 315 bps, a market source said.

Bank of America Merrill Lynch, BNP Paribas, HSBC, JPMorgan and Morgan Stanley were the bookrunners for the Rule 144A and Regulation S deal.

The notes are guaranteed by Seoul, South Korea-based Hyundai Motor.

Pemex, Reliance plan deals

In other deal-related news, Mexico-based petrochemical company Pemex is planning a 10-year issue of fixed-rate domestic and international notes, a market source said.

HSBC and Santander are the bookrunners for the domestic notes while HSBC, Santander and Morgan Stanley are the bookrunners for the international notes.

India-based petrochemical and retail conglomerate Reliance Industries is planning a $1 billion issue of 10-year notes, a market source said.

Issuance is likely to take place in early 2012.

Citigroup, Bank of America Merrill Lynch and UBS are the bookrunners for the deal.

Votorantim sets meeting

Brazil-based lender Votorantim is planning an investor meeting for Dec. 8 with Barclays Capital, HSBC and Morgan Stanley.

And Russia's Nomos Bank is planning an issue of at least $300 million notes in 2012, a market source said.

No other details were immediately available on Thursday.

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