EM activity solid; Automotores Gildemeister prints bonds as Greece woes plague markets

By Christine Van Dusen

Atlanta, May 17 - Chile's Automotores Gildemeister SA sold notes on Tuesday amid continued concern about Greece - which will likely need at least a "soft" restructuring of its debt - that widened spreads early in the session but left emerging markets assets mostly unscathed.

"Everyone is watching what is happening in Europe, for the most part, and Greece," an emerging markets strategist said. "But so far EM has held up pretty well, all being said."

Prices were up about 0.14% on average, he said, while the JPMorgan Emerging Markets Bond Index Global spread widened by about 3 basis points before finishing the day about flat at Treasuries plus 280 bps.

"That's with Treasuries. The 10-year is 4 bps down and the 30-year is 6 bps lower on a yield basis," he said. "But prices haven't completely tracked Treasuries."

With yields falling, investors are moving into longer-duration assets, a London-based market source said.

Gildemeister sells notes

In its new deal, Chile-based vehicle distributor Automotores Gildemeister sold $300 million 8¼% notes due 2021 at par, a market source said.

The notes priced in line with talk, which was set at 8 3/8% to 8½%.

JPMorgan was the bookrunner for the Rule 144A and Regulation S notes, which include a change-of-control put at 101%.

Proceeds will be used for general corporate purposes and to repay debt.

"There may be some issuers that want to take advantage of the lower yield at the moment," the strategist said. "The question is whether investors are confident about placing their orders just yet."

Lebanon launches

Also on Tuesday, Lebanon launched a $1 billion two-tranche issue of notes due 2019 and 2022, a market source said.

The $650 million notes due May 20, 2019 launched at a 6% yield after being talked at the 6% area. The $350 million tap of the sovereign's 6.1% notes due 2022 - which had been talked at the 6½% area - launched at a yield of 6.475%.

The original issue of 2022 notes totaled $225 million and priced at par.

Byblos Bank, Fransa Investment and HSBC are the bookrunners for the new Regulation S deal.

Russian Agricultural eyed

Tuesday also saw Moscow-based OJSC Russian Agricultural Bank mandate Barclays Capital, JPMorgan and VTB Capital for a dollar-denominated issue of subordinated notes, a market source said.

The Rule 144A and Regulation S deal is expected to launch following a roadshow that begins May 18.

"Given how EM seems to consistently take down subordinated risk at way less spread than high-grade demands, it's a surprise not to see more of these," a trader said.

Pertamina prices

This news followed the late-Monday pricing of Indonesia-based oil and gas company PT Pertamina Persero's $1 billion 5¼% notes due May 23, 2021.

The notes came to the market at 98.097 to yield 5½%, at the lower end of talk, which was set at 5½% to 5 5/8%.

Citigroup, Credit Suisse and HSBC were the bookrunners for the Rule 144A and Regulation S notes, which include a change-of-control put at 101% if the government holds less than 50% of the company's shares.

Sukuk issuers set guidance

Also on Tuesday, Saudi Arabia-based economic development financing institution Islamic Development Bank whispered it planned five-year offering of sukuk notes at Libor plus 35 bps, a market source said.

HSBC, Standard Chartered Bank, BNP Paribas and Deutsche Bank are the bookrunners for the deal, which is expected to price Wednesday.

Also from the UAE, Sharjah-based Sharjah Islamic Bank whispered its planned sukuk offering of five-year notes at Libor plus 287 bps, a market source said.

Standard Chartered and HSBC are the bookrunners for the Regulation S notes.

"That makes sense, given the current sukuk mania," a source said.

In trading, bonds from the Middle East were generally strong, with particular firmness for Abu Dhabi and Dubai.

"They're all very strong right now, totally ignoring any global weakness," the source said.

Turkey firms

In other trading, the longer end of the sovereign curve was a touch firmer for Turkey, a market source said. And better buyers were seen for Turkey-based lender Finansbank AS' new 2016 notes, which came to the market at 99.384 on May 5.

On Tuesday morning in New York, the notes were seen at 96.75 bid, 97.25 offered. Later they were trading at 96.875 bid, 97.375 offered.

Another Turkish lender, Turkiye Garanti Bankasi AS (GarantiBank) saw some retail interest on Tuesday. The company's 2021 notes, which priced at 98.086 on April 14, were trading at 99 bid, 99.37 offered.

Russian banks see buyers

Banks from Russia were also firmer on Tuesday, a trader said, with Alfa Bank seeing better buyers of its 2021 notes. The notes priced at par on April 19 and were trading Tuesday at 102.50 bid, 102.875 offered.

"Those notes are seeing the most demand so far," he said.

Said another market source: "Russian corporates in general are very firm, even as oil retraces further."

Also firm on Tuesday were Ukraine-based lender OJSC Oschadbank's 2016 notes, which priced at par on March 2.

"That's on the move today," he said.

The notes were seen at 103.25 bid, 103.75 offered on Tuesday.

BTA Bank underwhelms

Looking to Kazakhstan, the trader noted good two-way interest in BTA Bank in the morning, prior to the company's afternoon conference call.

"Prices are going out supported, but at the lows," he said.

But the call, he said, was underwhelming. "That sent the bonds 2 points off earlier highs," he said.

And Nigeria's GTB Finance BV saw good two-way flow on its new 2016 notes, which priced at 98.981 and were trading at 101.50 bid, 101.80 offered.

"South Africa was another beneficiary of the low-beta EM bid," he said.

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