Brazil prices amid solid start to 2012 for EM assets; Emirates Islamic Bank sets roadshow

By Christine Van Dusen

Atlanta, Jan. 3 - The Federative Republic of Brazil priced notes on a positive Tuesday for emerging markets assets, which saw spreads tighten and some issuers take steps toward the market in spite of less-than-stellar global headlines at the start of the new year.

"Despite all the doom and gloom in the press, it looks like a very happy new year from the credit markets, with early indications showing unanimous strength," a London-based trader said. "Clearly the under-allocated, cash-rich funds are looking to invest, overriding any concern about the usual January supply deluge or any current euro concerns."

The Markit iTraxx SovX spread was just 5 basis points tighter at the start of the day.

"But cash indices in the Middle East and North Africa suggest 10 bps to 15 bps tighter," he said. "It's a very constructive start to 2012, with spreads across the board all firm and life returning to the market after two weeks of inactivity."

The tensions between the United States and Iran were, for the most part, passing EM bonds by, he said.

"If anything, the resulting spike in oil prices is having more impact," he said.

In its new deal, Brazil priced a $750 million tap of its 4 7/8% notes due Jan. 22, 2021 at 110.997 to yield 3.449%, or Treasuries plus 150 bps, a market source said.

The notes were talked at the Treasuries plus 155 bps area.

BNP Paribas and Itau BBA were the bookrunners for the Securities and Exchange Commission-registered deal.

Proceeds will be used for general budgetary purposes.

Mexico launches notes

Also on Tuesday, Mexico launched its $2 billion offering of notes due March 2022 at Treasuries plus 175 bps, a market source said.

Deutsche Bank and Morgan Stanley are the bookrunners for the SEC-registered deal, which was talked at the Treasuries plus 180 bps area.

Proceeds will be used for general government purposes, including the refinancing, repurchase or retirement of domestic and external debt.

United Engineers roadshow

In other deal-related news on Tuesday, Singapore's United Engineers Ltd. is planning a roadshow for a possible issue of Singapore dollar-denominated notes, a market source said.

HSBC and OCBC are arranging the marketing trip, which will be held in Singapore.

United Engineers is a Singapore-based engineering company

And Sri Lanka's Bank of Ceylon is planning a $500 million offering of international bonds, a market source said.

The deal is expected to come to the market during the first half of the year.

BTA Bank eyed

A trader was keeping an eye on Kazakhstan's BTA Bank and the troubled lender's likely restructuring.

"Their non-payment of the coupon is barely causing a ripple," he said. "It seems they will maximize their 10-day grace period."

He was also watching Ukraine and its gas negotiations with Russia. The Ukraine's gas transportation system and national oil and gas company are expected to be privatized.

"Then there are the Russian presidential elections in March," he said.

Russia's 5% 2020 notes were seen trading on Tuesday at 103.25 bid, 104 offered after trading on Dec. 22 at 102.75 bid, 103.50 offered.

Russian corporates trade up

In other trading from Russia, Gazprom's 5.999% 2021s were quoted at 99.50 bid, 100.25 offered, versus 99 bid, 99.75 offered on Dec. 22. And Vimpelcom's 7.504% 2022s were trading at 84.50 bid, 85.50 offered after Dec. 22's level of 83.50 bid, 84.50 offered.

Also from Russia, Lukoil's 6.656% notes due 2022 were seen at 100.50 bid, 101.50 offered after trading at 100.25 bid, 101.25 offered on Dec. 22.

Tuesday saw the sovereign mandate Citigroup, Deutsche Bank, BNP Paribas, Sberbank and VTB Group for up to $7 billion of notes in 2012, a market source said.

No other details were immediately available on Tuesday.

Turkey notes flat

Looking at Turkey, the sovereign's consumer price index came in above expectations, at 10.45% instead of 10.13%, a trader said.

"This will go against the attempts of the central bank to intervene in the Turkish currency," he said.

In response, Turkey's 5 1/8% 2022s didn't budge early in the session - they were trading Tuesday at 95.75 bid, 96.50 offered, flat to Dec. 22's levels.

In other trading on Tuesday, South Africa's 5 7/8% 2022s were seen at 115.50 bid, 116.25 offered following the previous 115.25 bid, 116 offered.

Middle East in focus

From the Middle East, Qatar's 4½% 2022s were quoted at 103.88 bid, 104.62 offered after Dec. 22's level of 103 bid, 103.75 offered. The notes priced on Nov. 29 at 98.951.

The 5 7/8% 2021s from Abu Dhabi National Energy Co. (TAQA) - which priced on Dec. 5 at 99.515 - traded Tuesday at 104.75 bid, 105.50 offered after being seen Dec. 22 at 103.25 bid, 104 offered.

Abu Dhabi's International Petroleum Investment Co.'s 5½% 2022s were seen at 101.25 bid, 102.25 offered after trading Dec. 22 at 99.50 bid, 100.50 offered. The bonds priced on Oct. 28 at 99.743.

And Dubai-based Emirates Islamic Bank PJSC is planning a roadshow from Jan. 5 to Jan. 9 for a dollar-denominated benchmark-sized issue of notes, a market source said.

Citigroup, Emirates NBD Capital Ltd., HSBC, National Bank of Abu Dhabi, RBS and Standard Chartered Bank are the bookrunners for the Regulation S sukuk deal.

The roadshow will begin in Kuala Lumpur and travel to Singapore and the United Arab Emirates before concluding in London.

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