Mexico, Woori, Hungary, Fufeng price as risk aversion wanes; Citic plans notes; Ukraine eyed

By Christine Van Dusen

Atlanta, April 6 - Mexico, South Korea's Woori Bank, the Republic of Hungary and Hong Kong's Fufeng Group Ltd. sold notes on Wednesday as investors gravitated toward riskier assets in light of a possible shutdown of the U.S. government and a likely increase in the euro zone's interest rate. Also from Hong Kong, Citic Pacific Ltd. released details on its planned new deal.

"This market is bulletproof at the moment," an emerging markets trader said.

Emerging market debt spreads continued to tighten gradually, with the JPMorgan Emerging Markets Bond Index Plus spread starting the day down by 6 basis points from the start of the week. At the end of the day, the spread narrowed further, with Peru tighter by 16 bps, Ukraine by 20 bps and Venezuela by 17 bps.

In trading, bonds from Dubai, Ukraine and Turkey were in demand while South Africa lagged.

"Credit markets seem to be steering away from being directed by a global-macro force and are slowly becoming more heavily valued within their own right, a clear sign of stability," a New York-based trader said.

Mexico, Hungary print notes

In its new deal, Mexico priced a $1 billion tap of its 6.05% notes due Jan. 11, 2040 at 101.358 to yield 5.95%, or Treasuries plus 134.6 bps, via Merrill Lynch and Deutsche Bank.

The sovereign originally priced $1.5 billion of the 2040 notes in 2008. An additional $750 million was sold in 2009 and another $1 billion in April of 2010, the source said.

Mexico's spread "marginally underperformed on the back" of the new issue, RBC said.

Also on Wednesday, Hungary priced a $500 million tap of its 7 5/8% notes due March 29, 2041 at 104.417 to yield 7.261%, or Treasuries plus 270 bps, according to a filing from the sovereign.

Deutsche Bank, BNP Paribas and Citigroup were the bookrunners for the Securities and Exchange Commission-registered deal. Proceeds will be used for general funding purposes.

The original issue totaled $750 million and came to market March 24 at 98.084 to yield 7.791%, or Treasuries plus 330 bps.

Woori, Fufeng sell bonds

In another new deal, South Korea-based lender Woori Bank sold $500 million 5 7/8% notes due April 13, 2021 at 98.915 to yield 6.021%, or Treasuries plus 250 bps, a market source said.

The notes priced below talk, which was set at the Treasuries plus 270 bps area.

Barclays Capital, BNP Paribas, Merrill Lynch, HSBC, JPMorgan, UBS and Woori Investment & Securities were the bookrunners for the Rule 144A and Regulation S notes.

And Hong Kong-based monosodium glutamate and xantham gum producer Fufeng Group printed $300 million senior notes due April 13, 2016 at par to yield 7 5/8%, a market source said.

The notes priced in line with talk, which was set at the 7¾% area.

Citigroup and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for three years.

Votorantim does deal

These new deals followed the late Tuesday pricing of Brazil-based lender Banco Votorantim SA's $500 million add-on to its 5¼% senior notes due Feb. 11, 2016. The notes came to market at 101.624 to yield 4.867%, or Treasuries plus 260 bps, a market source said.

The notes priced at the tight end of talk, which was set at the Treasuries plus 270 bps area - via BB Securities, BNP Paribas, Bradesco BBI, HSBC, RBS and Banco Votorantim - in a Rule 144A and Regulation S deal

Proceeds will be used for general corporate purposes.

The original issue priced Feb. 7 at 98.834 to yield 5.52%, or Treasuries plus 325 bps.

Also from Latin America, Brazil-based petrochemical company Braskem SA launched an issue of $750 million notes due 2021 to yield 6%, a market source said.

Citigroup, Deutsche Bank and Santander are the bookrunners for the Rule 144A and Regulation S notes.

Proceeds will be used for general corporate purposes, to prepay debt and for the tender of the company's 2014, 2015 and 2017 notes.

"Another sure sign of stability is this suddenly active new issue calendar," the New York trader said. "The risk aversion theme has seemed to have taken a rest, for now."

Citic Pacific to sell notes

In other news from Hong Kong, business conglomerate Citic Pacific offered details of its dollar-denominated notes that will be issued in two tranches, a market source said.

The first tranche will include benchmark-sized perpetual notes with a fixed-rate coupon for the first five years, then from years five to 10 a fixed rate reset at the prevailing five-year Treasury spread. At year 10 and after, the fixed rate will be reset every five years at the prevailing five-year Treasury spread plus a one-time step-up margin of 100 bps.

The second tranche will feature 10-year benchmark-sized senior notes.

HSBC and UBS are the bookrunners for the Regulation S-only transaction, and proceeds will be used for general corporate purposes, including debt refinancing.

The notes are expected to price this week.

Pohang, IOB plan bonds

Wednesday also saw South Korea-based steel maker Pohang Iron and Steel Co. planning a dollar-denominated issue of benchmark-sized notes due 2021 via Barclays Capital, BNP Paribas, Deutsche Bank and Goldman Sachs in a Rule 144A and Regulation S deal.

Proceeds from the notes, which are expected to price Thursday, will be used for general corporate purposes.

The notes are expected to price Thursday.

And Indian Overseas Bank will set out on a roadshow starting April 7 for its planned issue of $500 million notes due 2016, a market source said.

Citigroup, HSBC, JPMorgan, RBS and Standard Chartered are the bookrunners for the Regulation S notes, which will be marketed in Singapore, Hong Kong and London.

Evraz taps bookrunners

Also on Wednesday, Russia-based steel and mining concern Evraz Group SA mandated Goldman Sachs, ING and VTB Capital for a dollar-denominated issue of benchmark-sized notes, a market source said.

The Rule 144A and Regulation S transaction will be launched following a roadshow starting April 13 in Geneva, Zurich and New York. The marketing trip will travel to Boston, Frankfurt, Munich, Los Angeles and London before wrapping up on April 18 in New York.

Turkish banks in demand

In trading on Wednesday, Turkey opened flat and later saw some good activity among corporate and sovereign bonds on the long end of the curve.

"Turkey is 30 bps tighter on the week," a London-based market source said.

Banks, in particular, saw good demand. "All the banks are tighter by 7 to 10 bps on the day," a trader said. "Akbank's 2015s are currently looking cheap. We traded a fair bit of Yasar 2015s today, which is finally catching up after lagging the rally. It got 58 bps tighter."

Also from Turkey, Garanti Bank is said to be considering an issue of bonds, likely with a five-year tenor.

Ukraine gains popularity

Issuers from Ukraine received a lot of attention on Wednesday. The $500 million 7 7/8% notes due 2016 from Switzerland-based and Ukraine-focused Ferrexpo Finance plc - which priced March 31 at par - were trading up, a market source said.

"The Ferrexpo that had a mixed response is now trading at 7½%, and the whole corporate sector there is on fire," he said.

Said a trader: "We just can't get enough of this sector."

Hungary was another strong performer on Wednesday, with the 2041 notes having tightened more than 50 bps, and Belarus saw its 2015 dollar notes tighten 150 bps on the week.

Egypt tighter, Ghana well bid

Looking at Africa, the 2020 bonds from Egypt were 87 bps tighter on the month, closing Wednesday at 97.75 bid, 98 offered.

"Ghana and Gabon still feel well bid, with Ghana outperforming Gabon on the week," the trader said. "And Morocco's 2020 euro notes cannot move from this 91 cash price level."

South Africa remained a relative laggard "as the prospect of supply still looms," he said.

Tunisia paper saw few buyers, he said, and Nigeria was 30 bps tighter on the week.

Abu Dhabi firm, Dubai tighter

From the Middle East, Abu Dhabi's sovereign and corporate bonds opened 3 to 6 bps better, remaining very firm and well supported throughout the European session.

Dubai opened 5 to 9 bps tighter and was "kicking higher" during the early afternoon before seeing a "grab attack," the trader said.

The 2014s were seen at 104 bid, 104.50 offered, 30 bps tighter on the day and 132 bps tighter on the month.

Looking at month-on-month moves, Dubai's 2014 and 2015 bonds are now 135 bps tighter while Bahrain's 2020s are tighter by 60 bps.

"Qatar is firm, but taking a back seat to Dubai," the trader said.

IPIC improves

The notes from Abu Dhabi's International Petroleum Investment Co. saw healthy week-on-week moves and were about 5 bps tighter on Wednesday. The 2021 euro notes were trading at 100 bid, 100.125 offered in the morning.

"And the 2015 dollar notes are playing catch-up, about 20 bps tighter on the day," a source said.

Abu Dhabi's Mubadala Development Co. PJSC - which is expected to issue new notes soon - was popular on Wednesday.

"The 19s printed a few times at 118," he said.

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