Lifestyle International unit, KT, Nan Fung do deals as spreads tighten; Lebanon active

By Christine Van Dusen

Atlanta, Jan. 17 - A unit of Hong Kong's Lifestyle International Holdings Ltd., South Korea's KT Corp. and China's Nan Fung International Holdings priced notes on a Tuesday that started out busy for emerging markets assets - with particular interest noted for sovereign and quasi-sovereign bonds - but diminished by the close of the day.

"It was an active morning overall, and flow-balanced," a trader said. "We did have one small 20-minute bout of bid-hitting, but overall the market is 5 to 10 basis points better, helped of course by U.S. Treasuries moving to 1.89%."

Said another trader, it was "another day where the general tone in the morning was much more supportive than the afternoon session. While the all-in rates are still probably pretty appealing for issuers, the spreads are well off the tights of the year."

The Markit iTraxx SovX index spread was tighter by 8 bps, he said.

"The market has shrugged off Friday's profit-taking and the European Union ratings downgrades to open strong with demand for all the liquid assets," a London-based trader said. "Sovereign and quasi-sovereign risk dominated the flow as crossover accounts got involved."

In trading on Tuesday, Lebanon continued to power along, particularly in its 2024s and 2026s, while Abu Dhabi-based International Petroleum Investment Co. traded poorly, a trader said.

In other trading on Tuesday, Kazakhstan-based BTA Bank's bonds managed to trade fairly well after the lender officially defaulted.

"The 2018 bonds still enjoy some retail investor demand to keep them just above 2015," another trader said in the morning.

By afternoon, BTA's bonds drifted marginally lower as retail investor buying abated, he said.

Russia-based Vimpelcom's 2022s were up 1 point to 89.50, he said, and South Africa's 2024s bounced after trading as low as 99 on Friday.

Ukraine lagged and Turkey's Akbank was an underperformer, at about 15 bps wider. Market-watchers were whispering about possible new issuance from the lender.

First Gulf notes trade up

In other trading on Tuesday, the recent issue of $500 million 4.046% notes due 2017 from Abu Dhabi's FGB Sukuk Co. Ltd. - a unit of First Gulf Bank PJSC - that priced at par was seen at 100.25, a trader said.

The notes priced to yield mid-swaps plus 287.5 bps via Citigroup, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S transaction.

Meanwhile, the $500 million issue of 4.718% notes due 2017 from Dubai's EIB Sukuk Co. Ltd. that priced at par were down on Tuesday at 99.625, he said.

The notes from the unit of Emirates Islamic Bank priced to yield mid-swaps plus 350 bps with Citigroup, Emirates NBC Capital Ltd., HSBC, National Bank of Abu Dhabi, RBS and Standard Chartered Bank.

Tamweel bonds trade down

And then there was the $300 million issue of 5.154% notes due 2017 from Dubai's Tamweel Funding III Ltd. The unit of real estate developer Tamweel PJSC priced the deal at par to yield mid-swaps plus 400 bps via leads Citigroup, Dubai Islamic Bank and Standard Chartered Bank in a Regulation S transaction.

Those notes were seen Tuesday at between 96 and 98 in trading.

"Of the recent new issues, it's a case of the good and the bad and the ugly," a trader said.

In other trading from the Middle East, Dubai Water and Electricity Authority's 2014s and 2017s were seen ticking along nicely as the market prepared for the company's 2012 fixed-rate notes to mature. And the sovereign's bonds held steady, he said.

Lifestyle unit sells bonds

Also on Tuesday, Hong Kong's LS Finance (2017) Ltd., priced a $350 million issue of 5¼% notes due Jan. 26, 2017 at 99.346 to yield 5.401%, or Treasuries plus 460 bps, a market source said.

Bank of America Merrill Lynch and JPMorgan were the bookrunners for the Regulation S deal.

Proceeds will be used for capital expenditures related to new department store projects in China.

LS Finance is a subsidiary of Hong Kong-based retail company Lifestyle International Holdings Ltd.

And South Korea-based telecommunications company KT priced a $350 million issue of fixed-rate senior notes due Jan. 20, 2017 at 99.892 to yield 3.899%, a market source said.

Goldman Sachs and JPMorgan were the bookrunners for the Regulation S deal.

Nan Fung prints notes

Hong Kong-based property developer Nan Fung priced a $350 million issue of 5¼% notes due Jan. 20, 2017 at 99.376 to yield Treasuries plus 460 bps, a market source said.

The notes priced at the low end of talk, set at Treasuries plus 465 bps, plus or minus 5 bps.

HSBC, JPMorgan and Goldman Sachs were the bookrunners for the Regulation S deal.

Also from Asia, Taiwan-based financial services company Chailease Finance Co. Ltd. has mandated ANZ, Bank of China and Standard Chartered Bank for a roadshow, a market source said.

The marketing trip began Tuesday in Singapore and concludes Wednesday in Hong Kong.

NWS taps bookrunners

Hong Kong-based infrastructure and service conglomerate NWS Holdings Ltd. has mandated Deutsche Bank, HSBC, JPMorgan and Standard Chartered Bank for a dollar-denominated issue of notes, a market source said.

A marketing trip is expected for the Regulation S deal.

And Philippines-based lender Rizal Commercial Banking Corp. is planning a dollar-denominated issue of five-year notes, a market source said.

Standard Chartered Bank is the bookrunner for the Regulation S deal, part of the company's $1 billion euro medium-term note program.

Proceeds will be used for general banking and relending purposes.

Grupo Aval mandates leads

From Latin America, Colombia-based banking company Grupo Aval Acciones y Valores SA has mandated Goldman Sachs and JPMorgan for a roadshow starting Jan. 19, a market source said.

A Rule 144A and Regulation S deal may follow.

The roadshow begins in Santiago and travels to London, Lima, Boston and Los Angeles before wrapping up on Jan. 24 in New York City and San Francisco.

Brazil-based finance and insurance company Itau Unibanco Holding SA set price talk for a $500 million tap of its 6.2% notes due Dec. 21, 2021 at the par area, a market source said.

Bank of America Merrill Lynch, Itau BBA and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

And Peruvian mining company Volcan Compania Minera SA will set out on a roadshow on Wednesday for a possible issue of dollar notes, a market source said.

JPMorgan and Morgan Stanley are the bookrunners for the Rule 144A and Regulation S deal.

The marketing trip will begin in Lima and travel to Santiago, London, Los Angeles, Zurich, Geneva, San Francisco and New York before concluding on Jan. 25 in Boston and New York.

Korea Gas notes draw orders

The final book for Korea Gas Corp.'s $750 million issue of 6¼% notes due Jan. 20, 2042 was about $4.25 billion with 330 accounts involved, a market source said.

The deal priced at 98.063 to yield Treasuries plus 345 bps via Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS in a Rule 144A and Regulation S deal.

About 48% of the orders came from the United States, 35% from Asia and 17% from Europe. Fund managers accounted for 75%, insurers 14%, banks 7%, private banks 3% and central banks 1%.

Banco do Brasil oversubscribed

Also oversubscribed was the $1 billion issue of 9¼% perpetual notes issued last week by Brazil-based lender Banco do Brasil SA at par with bookrunners BB Securities, BNP Paribas, Citigroup, HSBC and Standard Chartered Bank in a Rule 144A and Regulation S deal.

The final book was more than $6.2 billion with 364 accounts involved, a market source said.

About 38% of the orders came from Europe and the Middle East, 28% from Asia, 25% from North America and 9% from Latin America.

Private banks accounted for 49%, fund managers 26%, banks and financial companies 14%, hedge funds 6%, insurers and pensions 2% and others 3%.

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