SB Capital, Latvia print notes during weaker, cautious session; Ukraine, Romania ahead

By Christine Van Dusen

Atlanta, June 9 - Russia's SB Capital SA and the Republic of Latvia sold notes on a generally weaker day for risky assets, as economic volatility continued to dominate headlines and keep investors cautious on Thursday.

"Global growth concerns remain the main focus of market attention, with risk assets generally showing moderate weakness," according to a report from RBC Capital Markets.

As a result, investors are leaning toward a more neutral and cautious positioning, according to a report from Barclays Capital Markets.

"The recent volatility in economic data seems to have pushed risk appetite onto the sidelines," according to the report. "It seems that investors may remain on the sidelines until there is greater clarity from the economic data, implying a dull choppy trading environment for the month ahead."

Still, spreads tightened, with the JPMorgan Emerging Markets Bond Index Plus spread narrowing by 10 basis points to Treasuries plus 282 bps. Venezuela was tighter by 21 bps and Argentina 29 bps.

Flow-wise, it was a moderately active Thursday, a trader said, with some selling for Dubai following news that the sovereign had mandated bookrunners for a dollar-denominated issue of benchmark-sized notes.

"Overall it's been a quiet-ish afternoon after a busy morning," he said.

SB Capital sells bonds

In its new deal, Russia's SB Capital priced $1 billion 5.717% notes due June 16, 2021 at par to yield mid-swaps plus 260 bps, a market source said.

Deutsche Bank, JPMorgan, RBS and HSBC were the bookrunners for the deal, which came in line with talk of mid-swaps plus the 265 bps area.

The borrower is Sberbank, a lender based in Moscow.

In the secondary market on Thursday, other names from Russia weren't getting much love, a trader said.

"Russia is not seeing the wave of demand you'd expect given oil's recent recovery, with five-year credit default swaps 5 bps wider at 138 and most of the quasi-sovereign names trading heavy," he said.

Latvia does deal

Also on Thursday, Latvia sold $500 million 5¼% notes due June 16, 2021 at 98.164 to yield 5.491%, or mid-swaps plus 237.5 bps, below talk of mid-swaps plus the 250 bps area.

Citigroup and Credit Suisse were the bookrunners for the Rule 144A and Regulation S notes.

Ukraine set price guidance for its planned issue of benchmark-sized dollar notes due 2016 at the 6 3/8% area, a market source said.

JPMorgan, Morgan Stanley and VTB Capital are the bookrunners for the Rule 144A and Regulation S notes.

Romania talked its euro-denominated issue of benchmark-sized five-year bullet notes at the mid-swaps plus 260 bps area, a market source said.

Erste Group and Societe Generale are the bookrunners for the Regulation S notes, which are expected to price by the end of the week.

Brazil banks plan deals

The day also saw Brazil-based lender Banco Nacional de Desenvolvimento Economico e Social (BNDES) mandate BNP Paribas and Credit Suisse for a roadshow on June 16 and June 17, a market source said.

An issue of notes may follow, subject to market conditions.

Also from the Brazilian banking sector, Banco Safra SA is planning a real-denominated issue of notes due Jan. 5, 2015, a market source said.

Banco Safra is the bookrunner for the Regulation S notes, which will be payable in dollars.

Proceeds will be used for general corporate purposes.

Qatar tightens

In trading, Qatar opened on Thursday between 2 bps and 5 bps tighter. "There's good street demand, and the 2015s still look OK on the curve," a trader said.

Paper was still floating around for Bahrain's 2020 dollar notes and retail demand for BBK was ongoing while Tourism Development & Investment Co. remained heavy.

"There's also selling in Dubai now in the Street," a trader said.

This came on the heels of news that the sovereign mandated UBS, RBS and Emirates NBD for a dollar-denominated issue of benchmark-sized notes, a market source said.

A roadshow is expected to take place during the June 13 week.

"While I didn't think it was overly surprising, it triggered enough dealers to lighten up on risk and the market subsequently saw a mini-wave of bid hitting," he said. "Dubai Water and Electricity Authority was over 10 bps wider and the recent Emirates 2016 dollar notes are proving very liquid, at 99.90 bid, 100 offer."

Belarus in focus

Belarus was also on radar screens on Thursday on the news that the sovereign would get more aid and that fertilizer company Belaruskali could be privatized, which sent spreads 50 bps tighter, a trader said.

Ukraine was unchanged, while Kazakhstan's BTA Bank saw some interest, with its 2018s opening at 82¼ to 83¼ and the lender's 2025s trading at the 46 level, he said.

"That's bouncing nicely," a London-based market source said. "But there is paper around."

In Turkey, two-way interest was seen for Yuksel Insaat AS.

Nigerian names struggle

Looking to Africa, Nigeria's 2021 dollar notes were between 3 bps and 6 bps wider on Thursday while GTB Finance BV's 2012 and 2016 notes struggled a bit, a trader said.

Though Moody's Investors Service reported a deterioration in South Africa's fiscal picture, prices didn't move much, he said.

"The curve there is holding in well, aside from some selling of corporates ahead of the rich-looking African Bank deal," a trader said. "It felt heavy yesterday, not so heavy today."

He reported seeing demand for Afreximbank and Ghana.

"And the Egypt 2040 dollar notes are very heavy," he said. "Morocco continues to trade well."

SIB, Lebanon inch up

Taking a closer look at recent new issues, the notes from Sharjah-based SIB Sukuk Co. II Ltd., which traded above 102 on Tuesday, were seen Thursday at 102.45 bid, 102.70 offered.

From Lebanon, the 2019 notes that priced May 18 at par were trading Thursday at 100.20 bid, 100.50 offered. And the sovereign's tap of its 2022 notes, which came to the market at 97.016, were seen at 97.50 bid, 98 offered.

The 2016 notes that priced at par from Islamic Development Bank on May 18 were trading Thursday at 99.70 bid, 100.20 offered, while the recent issue of 2016 notes from HSBC Bank Middle East - which priced May 26 at par - were seen at 101.27 bid, 101.62 offered.

And the new notes from Emirates -$1 billion 5 1/8% notes due 2016 that priced at 99.904 - were trading Thursday at 99.90 bid, 100 offered.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.