Chinese corporates price notes; busy session for EM assets; Russian corporates lead way

By Christine Van Dusen

Atlanta, March 5 - China's AIA Group Ltd. and PCCW Ltd. priced notes on an active Tuesday for emerging markets assets, with Russian corporate bonds leading the charge, bypassing the Middle East and North Africa.

"Well, after yesterday's quiet session the market sprung back to life today," a London-based trader said. "Good interest and flows across the board."

The Markit iTraxx SovX index spread narrowed 4.5 basis points to Treasuries plus 178.5 bps. The corporate index, at 232 bps spread on Monday, tightened 7 bps to 225 bps over Treasuries.

"Asian positive sentiment has led to a sell-off in US Treasuries this morning," a London-based analyst said. "The Middle East and North African market is opening fairly well supported."

Investors were in risk-on mode, she said.

"Risk is back on this morning, with corporate buyers emerging," she said. "Emerging markets corporates have attracted a bid."

Among the solid performers on Tuesday were Russia's OAO Gazprom, OJSC VimpelCom, Evraz Group, OAO Novatek, OAO Lukoil, OAO Sberbank and Vnesheconombank (VEB).

Looking to Africa, some sovereign names performed well on Tuesday, including Gabon, Nigeria, Ghana and Namibia, a trader said.

"Angola has bounced nicely off the lows," he said. "African Bank was downgraded by Moody's and saw retail demand."

Lebanon, meanwhile, was seeing very limited interest.

"If anything, they're seeing sellers," he said.

In deal-related news, Dubai Islamic Bank PJSC mandated bookrunners and Chile's Tanner Finanzas Corporativas is on a roadshow.

AIA sells bonds

In its new deal, China-based insurance company AIA Group Ltd. priced a two-tranche issue of $1 billion notes due 2018 and 2023 via Deutsche Bank, Morgan Stanley, ANZ, HSBC, Standard Chartered Bank, BNP Paribas, DBS Bank and JPMorgan.

The Regulation S deal included $500 million 1¾% notes due 2018 that priced at 99.425 to yield 1.871%, or Treasuries plus 110 bps.

The notes priced at the tight end of talk, set at Treasuries plus 110 bps to 115 bps.

The second tranche totaling $500 million of 3 1/8% notes due 2023 priced at 99.413 to yield 3.194%, or Treasuries plus 130 bps.

This tranche also priced at the tight end of talk, set at 130 bps to 135 bps over Treasuries.

PCCW does deal

In another new deal, China-based telecommunications company PCCW sold $500 million 3¾% notes due 2023 at 98.785 to yield 3.898%, or Treasuries plus 200 bps.

DBS, HSBC, Standard Chartered Bank, ANZ and Morgan Stanley were the bookrunners for the Regulation S deal.

Bharti Airtel oversubscribed

The final book for India-based mobile telecommunications company Bharti Airtel Ltd.'s new $1 billion issue of 5 1/8% notes due 2023 was more than $9.5 billion from 421 accounts, a market source said.

The notes priced Monday at par to yield 5 1/8%, or Treasuries plus 324 bps.

Barclays, BNP Paribas, Citigroup, Deutsche Bank, HSBC, Standard Chartered Bank and UBS were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repay and refinance existing foreign currency indebtedness and for general corporate purposes.

About 37% of the orders came from Asia, 33% from the United States and 30% from Europe.

Fund managers picked up 67%, private banks 19%, banks 8% and insurers and corporates 6%.

Severstal sees some buying

Russia's OAO Severstal was on the market's mind, given its weaker-than-anticipated fourth-quarter earnings results. The company did, however, report a better-than-expected liquidity position.

"However, it remains to be seen whether the group will look to refinance the second bullet of short-term debt this year," the London analyst said. "Outlook was lukewarm, with the group guiding for flat iron-ore prices and a slight decline in coking coal in 2013."

Still, the company's bonds did see some buying, she said.

Ukraine bonds trade up

From Ukraine, sovereigns have moved up during the week, said Svitlana Rusakova of Dragon Capital.

Even the "relatively illiquid" 2015s have reached a stronger level, she said.

"President Yanukovych's highly anticipated visit to Moscow did not produce any significant headlines," she said.

ADCB reaches for 101

In other trading from the Middle East, the recent 2023 notes from Abu Dhabi Commercial Bank (ADCB) struggled to top 101, trading closer to 100.65 bid, 100.90 offered for most of Tuesday's session, a trader said.

Totaling $750 million, the 4½% notes due 2023 priced at 99.127 and were quoted Monday at 100.55 bid, 100.95 offered.

By the end of Tuesday, "a decent amount of ADCB 2023s traded between 100.70 and 101.05," he said.

The other tranche of ADCB's deal - $750 million 2½% notes due 2018 that priced at 99.636 - continued widening, moving out 3 bps since launch.

"Poorly placed," the trader said.

Bahrain tightens

Buyers were seen for Bahrain's 2022s, which were 13 bps tighter on the week, the London trader said.

"Bahrain has had a good week, especially the 2020s and 2022s," he said. "Abu Dhabi National Energy Co. has been a rock. The credit trades very well."

He also noted some buying interest in notes from Dubai Holdings and Dar al Arkan.

"Dubai's 2043s are struggling at 96½ bid, 97 offered, although I see retail investor demand," he said. "Dubai's 2023s are pulling back as well, trading at 100.40 bid, 100.65 offered."

Also active on Tuesday were the 2025 notes from Emirates airlines, which were sighted at 100¾ bid, 101¼ offered.

DEWA ticks higher

The recent issue of notes from Dubai Electricity and Water Authority - $1 billion 3% notes due 2018 that priced at par to yield mid-swaps plus 223.4 bps - traded Tuesday at 100.45 bid, 100.55 offered.

Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD, RBS and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance debt and invest in company projects.

Dubai Islamic mandates leads

Dubai Islamic Bank has mandated Dubai Islamic Bank, Emirates NBD Capital, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank for a benchmark-sized issue of dollar-denominated perpetual notes that will be marketed during a roadshow, a market source said.

The roadshow for the Regulation S deal will begin Thursday and take place in Asia, the Middle East and Europe.

In response to this news, the recent perpetual notes from Abu Dhabi Islamic Bank took a hit, trading at 105 after Monday's level of 106.

"[Dubai Islamic]'s senior notes trade about 75 bps back of ADIB's seniors, and ADIB's perpetuals are close to a 5 3/8% yield. So this one is looking like high-6% to me," a trader said. "Still, given the private banking interest I've seen on ADIB's perpetuals, this one should do well."

Tanner on roadshow

Chile-based financial services company Tanner Finanzas Corporativas is on a roadshow for a five-year issue of up to $300 million notes via BofA Merrill Lynch, a market source said.

This news followed the Monday pricing of Hong Kong-based developer Swire Properties MTN Financing's $500 million 2¾% notes due 2020 at 99.219 to yield Treasuries plus 165 bps.

BofA Merrill Lynch, HSBC and JPMorgan were the bookrunners for the Regulation S deal.

The proceeds will be used for working capital purposes.

Krungthai sells notes

Thailand-based financial institution Krungthai Bank PCL sold $500 million 2¼% notes due 2018 at 99.769 to yield 2.295%, or Treasuries plus 155 bps, a market source said.

BofA Merrill Lynch and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Krungthai is a financial institution based in Bangkok.

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