America Movil, Korea East-West Power, Olam do deals; EM activity hushed by economic unease

By Christine Van Dusen

Atlanta, July 9 - Mexico's America Movil SAB de CV, Korea East-West Power Co. Ltd. and Singapore's Olam International Ltd. sold notes on a quieter Monday for emerging markets assets as economic concerns drove risk aversion.

"Weekend media reports that the Dutch and the Finnish governments are unwilling to back European Union summit proposals as well as reports that sovereigns may be required to guarantee the European Stability Mechanism loans have dampened risk appetite," according to a report from Barclays Capital. "The weak U.S. employment report on Friday confirmed signals from the ISM survey that the U.S. economy remains sluggish."

The relief rally spurred by the E.U. summit announcements and recent policy easing "has proven limited in magnitude and brief in duration," the report said.

Said a trader, "Quiet session, but the beat goes on."

In its new deal, Mexico City-based telecommunications company America Movil priced a $2 billion two-tranche issue of notes due in 2022 and 2042.

The deal included $1.25 billion 3 1/8% notes due July 16, 2022 that priced at 99.49 to yield 3.185%, or Treasuries plus 168 basis points.

The second tranche - $750 million 4 3/8% notes due July 16, 2042 - priced at 98.244 to yield 4.482%, or Treasuries plus 188 bps.

Goldman Sachs and Morgan Stanley were the bookrunners for the Securities and Exchange Commission-registered deal.

"The 2035s were trading at 186 prior to the deal announcement and are still trading at that level at launch," a New York-based trader said.

Korean utility does deal

Monday also saw electricity generator and supplier Korea East-West Power price a $500 million issue of 2½% notes due July 16, 2017 at 99.641 to yield Treasuries plus 195 bps.

Bank of America Merrill Lynch, Citigroup, HSBC, Morgan Stanley and UBS were the bookrunners for the Rule 144A and Regulation S deal.

Olam prices notes

Singapore-based food processing company Olam International priced S$350 million 5.8% notes due July 17, 2019 at par to yield 5.8%, a market source said.

The notes priced at the low end of talk, set at 5.8% to 5.85%.

Deutsche Bank, HSBC and Standard Chartered were the bookrunners for the Regulation S deal.

Aspial taps bookrunners

In other news from Singapore, jewelry company and boutique operator Aspial Corp. mandated HSBC and United Overseas Bank to run a roadshow starting Tuesday, a market source said.

No other details were immediately available on Monday.

Czech Republic railway operator Ceske drahy AS (Czech Railways) tapped Barclays Capital, Citigroup and ING to market a euro-denominated issue of notes during a roadshow, a market source said.

The marketing trip for the Regulation S deal is expected to begin on Wednesday.

Russia's Bank of St. Petersburg postponed its planned seven-year issue of up to $300 million senior notes via BNP Paribas and UBS.

Initial price talk for the Regulation S deal was set in the low 11% area.

Emirates Islamic trades up

In the secondary market on Monday, the recent deal from Dubai's Emirates Islamic Bank - a $500 million issue of 4.147% notes due Jan. 11, 2018 that priced at par - opened at 100.25 bid, 100.50 offered and closed at that same level.

Emirates NBD Capital, Credit Agricole, Dubai Islamic Bank, HSBC and Standard Chartered were the bookrunners for the Regulation S-only deal.

"They were quoted at 100.25 bid, 100.45 offered for most of the day," a trader said.

The Kingdom of Bahrain's recent $1.5 billion issue of 6 1/8% notes due July 5, 2022 opened on Monday at 100.15 bid, 100.40 offered after pricing at 99.867.

"That's struggling a little," a trader said. "That has caught me a little off guard, moving steadily lower after hitting 101.125 last week."

Citigroup, Gulf International Bank, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

Buyers, sellers for MAF

The $500 million issue of 5¼% seven-year notes from Dubai's Majid al Futtaim (MAF) that came to the market at par was seen at par bid, 100.50 offered on Monday after trading Friday at 100.30 bid, 100.55 offered.

"There's two-way action on that today," a trader said.

JPMorgan, National Bank of Abu Dhabi, Barclays Capital, Standard Chartered and UBS were the bookrunners for the Regulation S transaction.

TAQA, Qtel perform

In other trading on Monday, Abu Dhabi National Energy Co. (TAQA) saw its 2021 bonds trade well, as did Qatar's Qtel International, the London trader said.

"Dar al Arkan's 2015s are trading now with a 108 handle and Dubai Holding's 2014s are now trading with a 95 handle," he said. "Both are having a good run for somewhat differing reasons. Plenty of market commentators and analysts like Dubai Holding and have highlighted its attractiveness versus the sovereign."

Dar al Arkan's bonds traded up on the news of positive second-quarter results.

"We were quite active this morning on the 2015s," he said. "Jebel Ali Free Zone (Jafza) was a little heavy in the market."

Bulgaria, VEB notes move lower

The recent issue of €950 million 4¼% notes due July 9, 2017 from the Republic of Bulgaria was trading Monday at 100.15 bid, 100.40 offered after being quoted Friday at 100.50 bid, 100.70 offered.

The notes priced at 99.182 via BNP Paribas, HSBC and Raiffeisen Bank in a Regulation S deal.

Russia-based lender Vnesheconombank (VEB), which priced a $1 billion issue of 6.025% notes due July 5, 2022 at par, saw the notes trading at 102.31 bid, 102.81 offered on Monday.

On Friday the notes were quoted at 102.50 bid, 103 offered.

Credit Agricole, JPMorgan, Deutsche Bank and HSBC were the bookrunners for the deal.

The $800 million 6.95% notes due 2042 from railway operator Kazakhstan Temir Zholy Finance BV that recently priced at par were seen Monday at 103.75 bid, 104.75 offered after trading Friday at 103.50 bid, 104.50 offered.

Barclays Capital, HSBC and Kazkommerts Securities were the bookrunners for the Rule 144A and Regulation S deal.

Latin America holds ground

Looking to Latin America, corporate issues traded with a positive tone, a New York-based trader said.

"As U.S. Treasury yields continue to drive lower again today, EM spreads have been able to hold, and we are able to gain ground once again this morning on a price basis," he said.

Spreads for bonds from Petroleo Brasileiro SA (Petrobras) and Vale SA were firm, even amid light inquiry levels, he said.

Paper from Brazil-based OGX Petroleo e Gas Participacoes SA was still dominating Street volumes.

"The 2018s have made their way back to 93 and the [2022s] are at 90," he said. "That widened a point prior to the E.U. summit news and approximately 2½ points, currently."

Brazilian paper sits still

Most high-grade paper from Brazil ran higher following the E.U. summit. "But it now sits at clear resistance levels, looking for more conviction to take some of the names higher and tighter," the New York trader said.

Votorantim is an exception, he said.

"We still see it grinding a bit higher the last few days," he said. "We've also seen a nice price run on Chile corporates."

Bonds from Mexico's Cemex SAB de CV held onto their gains after an exchange announcement.

Aleesia Forni contributed to this article.

© 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.