Indian lenders still dominate primary market; positive tone, tighter spreads for EM bonds

By Christine Van Dusen

Atlanta, Aug. 21 - India's Axis Bank and IDBI Bank priced notes on Tuesday in the hopes of capitalizing on the demand shown for recent issues from Icici Bank, Indian Overseas Bank, Union Bank of India and State Bank of India.

The tone was mostly upbeat for emerging markets assets, with the Markit iTraxx SovX index spread 10 basis points tighter.

"On Tuesday morning a positive market background formed in anticipation of several important meetings due in Europe this week," according to a report from UFS Investment Co.

Volumes managed to bump up from the previous day, though activity was still muted as the summertime slowdown continued.

"It was a solid tone today, and considerably more activity and interest than yesterday," a London-based trader said. "There obviously are more inflows into the asset class, as there has been more demand for Russia, South Africa and Turkey assets."

Indeed, Russia's 2030 bonds stood out in trading on Tuesday, climbing by about 0.5% in the morning. Qatar's 2042 bonds moved up to 124 bid from Friday's 122. And very good demand was noted for Dubai Holding's 2014 and 2017 notes.

The buying that was seen on Tuesday was decent but not aggressive.

"Nevertheless, today we anticipate quite strong growth in the eurobond market," UFS said.

In its new deal, Mumbai-based Axis Bank priced a $250 million tap of its 5 1/8% notes due Sept. 5, 2017 at 101.835 to yield 4.71%, or Treasuries plus 390 bps.

Bank of America Merrill Lynch, Barclays, Citigroup, HSBC, JPMorgan and Standard Chartered were the bookrunners for the Regulation S deal.

The deal size now totals $750 million.

IDBI Bank, also based in Mumbai, sold S$250 million 3.65% notes due Aug. 28, 2015 at par to yield 3.65%, a market source said.

The notes were talked at 4%.

DBS Bank, HSBC and Standard Chartered were the bookrunners for the Regulation S notes.

South Africa gets attention

In other trading on Tuesday, South Africa's five-year credit default swaps closed at 137 bid, 140 offered after Friday's level of 147 bid, a trader said.

Sellers were seen for South Africa-based African Bank's 2017 bonds, while buyers were noted for Eskom Holdings' 2021 bonds.

"Investec is quieter today but still, net-net, there's been retail investor take-out over the week," he said.

The company's 2017 notes - which priced at 99.775 to yield Treasuries plus 310 bps - were seen at 97.50 bid, 98.50 offered after Monday's levels of 97.25 bid, 98.25 offered.

Some African paper scarce

Elsewhere in Africa, African Export-Import Bank's 2016 notes traded at 107 on Tuesday.

Nigeria's Access Bank saw demand on the Street, while GTB Finance was quoted at 108 bid.

"But I just cannot find paper anywhere," a trader said. "Egypt has ticked along nicely the past few days. They continue to perform and liquidity is poor."

The Republic of Angola's recent $1 billion issue of 7% notes due 2019 - which priced on Aug. 14 at par - were trading Tuesday at 104.25 bid, 105 offered after Monday's close of 103.87 bid, 104.62 offered.

VTB Capital was the bookrunner for the Regulation S deal.

Middle East in focus

From the Middle East, International Petroleum Investment Co. (IPIC) saw its 2015 notes close at 103.12 bid, 103.87 offered on Tuesday, unchanged from Monday.

The company's 2041 bonds closed Tuesday at 127 bid, 128 offered after Monday's quote of 126.50 bid, 127.50 offered. On Friday, the bonds were at 127.25 bid, 128.75 offered.

Dubai-based DPWorld's 2017 notes - which traded Monday at 108.12 bid, 109.12 offered - ended Tuesday at 108.50 bid, 109.25 offered. The company's 2037 bonds were seen at 103.75 bid, 104.50 offered on Tuesday after Monday's 103.62 bid, 104.62 offered.

Aldar Properties was trading well, as was sovereign paper from Dubai, the London trader said.

"Bahrain's 2022s cannot move through par here," he said. "Quite a few bonds in the Street around the 99.62 to 99.75 level over the past week."

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.