UAE's Union National Bank sells notes on cautious day for EM; Costa Rica's ICE on deck

By Christine Van Dusen

Atlanta, Nov. 2 - The United Arab Emirates' Union National Bank PJSC sold notes on Wednesday as investors continued to view emerging markets assets as somewhat-safe havens ahead of a controversial vote on the European Union's bailout plan for Greece.

"There are lots of crazy things going on, and not just in Europe," a trader said. "Today we are opening stronger, with cash bonds 10 bps to 15 bps tighter."

Helping to boost sentiment on Wednesday was the United States' Federal Open Market Committee decision to leave its policies unchanged, a move that showed restrained optimism about the economy.

"The new adage of 'when in doubt, buy EM' is in full effect today," a London-based trader said. "In the absence of any real news, we have replaced a weak spell mid-morning with a wave of buying."

That took Ukraine 40 basis points tighter, Russia-based Gazprom 20 bps tighter, Abu Dhabi's International Petroleum Investment Co. (IPIC) 20 bps tighter and Russia's Vimpelcom 35 bps tighter.

The day's more positive mood also helped Kazakhstan-based BTA Bank's bonds.

"They remain bid at 53 despite third-quarter results that show how bad the situation is there," a London-based trader said.

And bonds from South Africa were very strong, he said.

In other news on Wednesday, Bahrain was planning a roadshow for a sukuk offering of notes, and Costa Rica's Instituto Costarricense de Electricidad (ICE) set the size and tenor for a deal that's expected to price on Thursday.

UNB does deal

In its new deal, Abu Dhabi-based lender Union National Bank sold $400 million of 3 7/8% notes due Nov. 10, 2016 at 99.05 to yield 4.087%, a market source said.

Citigroup, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S deal.

"The new UNB seeing less interest as they print just $400 million, despite it looking optically cheap versus other Middle Eastern and North African bank risk," a trader said. "With the long holidays pending, expect a reduction in the current good liquidity seen in the region."

Bahrain plans roadshow

Bahrain will market its $1 billion offering of sukuk notes during a roadshow from Nov. 14 to Nov. 15, a market source said.

The marketing trip will be held in Kuala Lumpur, London and Singapore.

BNP Paribas, Citigroup and Standard Chartered Bank are the bookrunners for the Regulation S offering.

Proceeds will be used to finance the sovereign's budget deficit.

ICE sets size, tenor

Also on Wednesday, Costa Rica-based electricity provider and telecommunications operator ICE set the size at $250 million and the tenor at 10 years for its planned issue of notes, a market source said.

Citigroup and Deutsche Bank are the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for debt refinancing and capital expenditures.

Pricing is expected on Thursday.

IPIC notes active

Taking a closer look at Abu Dhabi-based IPIC, the company's recent $3.75 billion three-tranche notes were active in trading on Wednesday.

The deal included $1.5 billion of 3¾% notes due 2017 that priced at 99.669, $1.5 billion 5½% notes due 2022 that priced at 99.743 and $750 million 6 7/8% notes due 2041 that priced at 99.097.

"All opened 10 to 15 bps firmer as retail investors buy again," a trader said at Wednesday's open.

Barclays Capital, Goldman Sachs, JPMorgan, Mitsubishi UFJ Securities, Natixis and Societe Generale were the bookrunners for the Rule 144A and Regulation S deal.

By midday in Europe, IPIC's 2022s remained the most active while the 2041s saw good demand.

"The new IPIC deal is putting in a decent bounce, with the 2022s starting to recover," another trader said.

Turkey in focus

In other trading, Turkey started the day strong before turning choppy, another trader said.

"That continues, especially on the sovereigns, while demand for corporates still persists," he said. "Banks are generally better bid."

Indeed, the recent Export Credit Bank of Turkey (Turk Eximbank) was a standout on Wednesday. The Ankara-based lender on Monday priced a $500 million issue of 5 3/8% notes due 2016 at 99.49 via Barclays Capital, Citigroup, Commerzbank and ING in a Rule 144A and Regulation S deal.

"They're really performing," the London trader said at midday.

Turk Eximbank trades up

By the end of Wednesday's session, the Turk Eximbank notes were up 1 point from issuance.

Retail investors were also nibbling on Yuksel Insaat and Kuveyt Turk in small amounts.

"Also, dealers keep pushing Garanti Bankasi AS' 2021s' price higher, trying to cover their shorts," another trader said.

And from Ukraine, better buying was seen for Naftogaz, a trader said.

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