Korea's Doosan Infracore sells notes on choppy day for EM; Sukuks hit; Lindley sets talk

By Christine Van Dusen

Atlanta, Nov. 17 - Korea's Doosan Infracore Co. Ltd. sold notes on a choppy and thin Thursday that saw emerging markets investors paying particular attention to the recent issues of notes from Bahrain and Abu Dhabi Commercial Bank.

"A busy morning followed by a quieter afternoon," a trader said. "The market is still all over the place, with gyrations every half hour. It's choppy and thin. The backdrop still feels like a slow-moving train wreck."

Sukuk issues, in particular, took a hit on Thursday. They seem to have lost their market-darling status, a trader said.

"It doesn't take much to move markets around, and plenty of dealers are driving down bonds, especially the sukuks, which are behaving like a weakened duckling separated from its mother," a trader said. "Sukuks have been going through a decent bout of selling, and in this market some have really been beaten up."

He pointed to Abu Dhabi Islamic Bank as an example. The company's sukuk notes are wider by 45 basis points on the month. And Sharjah Islamic Bank's notes are 72 bps wider on the month.

"You couldn't find this bond for love nor money some time ago," he said.

In other news on Thursday, Peru's Corporacion Lindley SA set price talk for an issue of dollar notes while Peru-based development bank Corporacion Financiera de Desarollo (Cofide) revived its plans for a deal. And the Republic of Bolivia could bring a new issue to the market before the end of the year.

Doosan Infracore prices

In its new deal, Korea's Doosan Infracore priced a $350 million issue of 4½% notes due 2016 at 99.73 to yield 4.561%, a market source said.

HSBC, Korea Development Bank and Standard Chartered Bank were the bookrunners for the Regulation S transaction.

The notes are guaranteed by Korea Development Bank, a lender based in Seoul, South Korea.

And Peru-based Coca-Cola Co. bottler and distributor Corporacion Lindley set price guidance for its planned issue of dollar notes at the 7% area, a market source said.

Citigroup and JPMorgan are the bookrunners for the Rule 144A and Regulation S transaction.

A roadshow for the offering was held from Nov. 11 to Nov. 17.

Cofide, Bolivia ahead

In other news from Latin America, Peru-based development bank Cofide revived plans for an issue of $500 million 10-year notes, a market source said.

No other details were immediately available on Thursday.

And Bolivia is planning a $500 million issue of 10-year notes, a market source said.

The Rule 144A and Regulation S issue could come to the market before the end of the year.

IPIC bonds stay active

Trading on Thursday remained active for Abu Dhabi's International Petroleum Investment Co.'s recent notes.

"It's mainly the 2015s, 2016s and 2017s, although there is some decent interest on the 2020s out of Asia," a trader said. "The 2016s have had a great run but that may be fading a little with paper trading near 103.125 and 103.25 this morning. The 2017s still feel good to me. That's one to buy on some dips."

Another trader was also watching IPIC on Thursday.

"The bonds for the most part felt well offered," he said.

Bahrain ticks up

The new issue of $750 million 6.273% notes due 2018 from Bahrain, which came to the market Wednesday at par, performed fairly well on Thursday.

The notes opened at 100.05 bid, 100.25 offered and were later seen at 100.35 bid, 100.55 offered, a trader said.

"It's doing fairly well, all things considered," he said.

Said another trader, "That bond steadily rose throughout the day and closed at 100.60 bid, 100.80 offered having been priced at par."

In that bond's wake, the sovereign's 2020s saw sellers and were trading at 94.35 bid, 94.55 offered in the afternoon.

ADCB moves higher

Also ticking along nicely, he said, was Abu Dhabi Commercial Bank's new issue of $500 million 4.071% notes due 2016 that priced at par on Wednesday.

The notes opened at par bid, 100.10 offered and were later trading at 100.17 bid, 100.27 offered before closing at 100.12 bid, 100.22 offered.

"ADCB has probably done what every new issue should," a trader said. "They opened slightly above reoffer and gradually ticked higher. We saw some decent interest out of Europe and not much in the way of flippers. I think this deal is OK and over time more and more bonds will find long-term homes."

Dubai, Lebanon, Morocco eyed

In other trading from the Middle East, Dubai got "whacked around," a trader said.

"The bonds are closing the best part of 15 bps to 20 bps wider," he said. "And Lebanon continues to outperform its peer group."

The sovereign's 2022s were close, on a spread-basis, to the IPIC 2022s, he said.

From Africa, Morocco remained strong.

"You have to hand it to Morocco," a trader said. "The bid goes on. And there's a holiday tomorrow for Independence Day to cheer their bond performance."

And two-way interest was reported for African Export-Import Bank's 2016s.

Gazprom notes firm up

The recent issue of $1.6 billion notes due 2016 and 2021 from Russia-based gas company OJSC Gazprom was seen firming up throughout the day, a trader said.

The deal - via bookrunners BNP Paribas and JPMorgan - included $1 billion 4.95% notes due May 23, 2016 that priced at par to yield mid-swaps plus 375 bps and $600 million 5.999% notes due Jan. 23, 2021 that priced at par to yield mid-swaps plus 390 bps.

"The new Gazprom 2021s are trading heavy while the new 2016s are firming back to [reoffer] levels," he said. "The 2016s are right in the hitting zone for retail investors though and have seen significant interest."

The 2016s settled in at 99.85 bid, 99.95 offered while the 2021s ended the European session at 99.50 bid, 99.75 offered.

"They're not exactly flying out the door," he said.

Russian corporates take a hit

Looking elsewhere in Russia, most corporate bonds were trading heavy on Thursday, a trader said.

"Despite constructive news on Evraz Group's export orders being full for 2½ months, it got hit pretty badly today," he said. "The rest of the corporates are trading heavy as well."

From Turkey, Akbank remained one of the most active corporate credits.

"Some bank paper came out on Yapi Kredi and Isbank, but as soon as the tone firms up, retail investors continue nibbling on banks," he said.

PLN oversubscribed

The final book for Indonesia-based electric company PT Perusahaan Listrik Negara (PLN)'s recent $1 billion issue of 5½% notes due 2021 was $5.5 billion with 200 accounts involved, a market source said.

The notes priced at 99.054 to yield 5 5/8% via Barclays Capital and Citigroup in a Rule 144A and Regulation S deal.

About 44% of the orders came from Asia, 35% from the United States and 21% from the European Union.

Asset and fund managers accounted for 64%, insurers and pensions 19%, 7% banks and 6% private banks.

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