Argentina in focus as Easter slows EM activity; two dollar deals ahead; Tianneng postpones

By Christine Van Dusen

Atlanta, April 1 - Argentina was on the market's mind on Monday as the sovereign submitted a proposal to pay $1.4 billion to holders of its defaulted debt, representing a haircut similar to the one in 2010 that kicked off a series of lawsuits and holdouts.

In 2001, the sovereign defaulted on $95 billion.

"We saw no explicit mention of the discomforting size of the haircut, which we know from the past was 67%," a New York-based trader said. "Instead, the government's calculations show that the offer still provides a significant return to plaintiffs relative to what they likely paid for their defaulted bonds in the secondary market in 2008. We doubt that the court will like this proposal."

Investors on Monday seemed to agree, driving the price for insuring Argentina's debt higher and bond prices lower, with some notes declining 0.554.

"It is hard to be sure how the judges will rule," he said. "We think the judges would like to avoid precipitating another massive default on all Argentine debt, which would just lead to even more lawsuits."

Meanwhile, Sri Lanka's National Savings Bank (NSB) is planning up to $1 billion of bonds, Kazakhstan's Eastcomtrans LLP tapped bookrunners for a dollar deal, and Hong Kong-based Tianneng Power International Ltd. postponed an issue of notes.

Otherwise, trading and issuance were limited on Monday, given that most European markets were closed for Easter Monday.

"The yield on the US 10-year sovereign bonds has been showing neutral dynamics, which is the evidence for the absence of sharp dynamics in investors' mood during long holidays," according to a report from UFS Investment Co. "We expect slack dynamics in the bond market, whereas a marginal growth is possible in Russian bonds."

Tianneng Power shelves deal

Hong Kong-based battery product manufacturer Tianneng Power is postponing an issue of dollar-denominated notes due to market conditions, a market source said.

The deal was expected to total as much as $300 million and was talked at 8%.

Deutsche Bank was the sole bookrunner for the Rule 144A and Regulation S notes, which were to be non-callable for three years.

The proceeds were to be used to refinance existing indebtedness, to fund capital expenditures and for other general corporate purposes.

NSB, Eastcomtrans notes ahead

Sri Lanka's National Savings Bank (NSB) is planning up to $1 billion of bonds this month, a market source said.

Barclays, Citigroup and HSBC are the bookrunners for the deal.

And Kazakhstan-based railway network operator Eastcomtrans has mandated BNP Paribas and HSBC as bookrunners for an issue of dollar notes that will be marketed during a roadshow, a market source said.

The Regulation S deal's roadshow will begin Wednesday and take place in Europe and Asia.

SmarTone draws $400 million

The final book for China-based SmarTone Telecommunications Holding Ltd.'s recent $200 million issue of 3 7/8% notes due April 8, 2023 was about $400 million from 40 accounts, a market source said.

The notes priced at 98.905 to yield Treasuries plus 215 basis points via HSBC, Standard Chartered Bank and UBS in a Regulation S deal.

About 93% of the orders came from Asia and 7% from Europe.

Fund managers accounted for 68%, private banks 21%, insurance 8% and banks 3%.

The proceeds will be used for general working capital purposes and for future investments.

Croatia notes oversubscribed

The recent $1.5 billion 5½% notes due April 4, 2023 that Croatia priced at 99.054 to yield 5 5/8%, or Treasuries plus 371 bps, drew $8 billion from 380 orders.

BofA Merrill Lynch, Deutsche Bank, Goldman Sachs and JPMorgan were the bookrunners for the Regulation S deal.

About 60% of the orders came from the United States, 27% from the United Kingdom, 11% from Europe and 2% from others.

Asset managers picked up 81%, insurance and pension funds 7%, hedge funds 7% and banks and retail 5%.

Ukreximbank sells bonds

On Friday, the State Export-Import Bank of Ukraine (Ukreximbank) priced a $100 million increase of its existing 8¾% notes due Jan. 22, 2018 at 101.437, a market source said.

The notes were talked at 8 3/8%.

Credit Suisse and Morgan Stanley were the bookrunners for the Regulation S deal.

The outstanding size is $500 million.

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