Trading active, spreads tighter after FOMC decision; Dubai Holding to repay bond

By Christine Van Dusen

Atlanta, Oct. 31 - In the wake of the Federal Open Market Committee's decision to maintain its pace for bond buying, Thursday saw most cash prices in Central and emerging Europe open flat while spreads started off about 5 basis points tighter.

"United States 10-year Treasuries sold off later yesterday but have strengthened to 2.51% this morning," a London-based analyst said.

Russian state banks opened flat to slightly lower, she said. "We are also seeing better buying of [OAO Rosneft] 2022s and 2017s."

Turkey bucked that trend, however, with cash prices down as much as 0.25, she said.

Hungary also missed out on any benefit, post-FOMC, according to a report from Erste Group Research.

Overall, trading was fairly active, with early buyers of some of the more recent deals, a London-based trader said.

"Spreads tighter with the 10-year moving to 2.56%," he said. "Some paper around at the long end, but once again, in the face of the falling Treasuries market, we have held in very well this afternoon."

Over the month of October, high-yield names like Saudi Arabia's Dar Al-Arkan Real Estate Development Co. put in solid efforts, a trader said.

"Bahrain has seen very good support for all sovereign bonds and for BBK Bank," he said. "Lebanon looks like an OK value and buyers are circling."

Laggards for the month included Qatar National Bank SAQ - following their lackluster issue of $1.5 billion notes due in 2016 and 2018 - and many short-dated bonds.

Going forward, the trader recommends Abu Dhabi Commercial Bank's 2023s as well as bonds from Kuwait-based Kipco and Emirates' 2023s and 2025s.

Middle East in focus

From the Middle East, spreads started out Thursday mostly unchanged while buyers emerged for some of the more recent issues from the region, a London-based trader said.

"The long end of Qatar still feels like it's for sale, with the 2040s and 2042s about 6 bps to 7 bps wider on the week," he said. "Bahrain is the same story. It's now 40 bps to 45 bps tighter on the month."

The trader also saw some selling of the perpetual notes form Abu Dhabi Islamic Bank and Dubai Islamic Bank after both were squeezed on Wednesday.

"Qtel's laggard's remain the 2021s and 2028s," he said. "And some selling of Jafza Holdings and Emaar Properties was seen."

Al Khalij ticks up

In other trading from the Gulf region, Mubadala's 3¾% 2016 dollar notes were quoted at 105 5/8 bid, a trader said.

And Qatar-based Al Khalij Commercial Bank's recent $500 million issue of 3¼% notes due 2018 that priced at 99.575 opened Thursday at 99.80 bid, par offered.

BNP Paribas, HSBC, QNB Capital and Standard Chartered Bank were the bookrunners for the Regulation S deal.

MAF, QNB trade

The recent issue of notes from Dubai's Majid Al Futtaim Holding LLC (MAF) - $500 million 7 1/8% perpetual notes that priced at par - traded Thursday at 991/2, a trader said.

BofA Merrill Lynch, Emirates NBC, Goldman Sachs, HSBC, JPMorgan and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Qatar National Bank SAQ's recent $750 million tranche of 2¾% fixed-rate notes due 2018 that priced at 99.459 to yield Treasuries plus 160.2 bps moved to 164 bps on Thursday.

HSBC, Standard Chartered Bank, JPMorgan, RBS and Qatar National Bank were the bookrunners for the deal.

Sabic sees action

The $1 billion 2 5/8% notes due in 2018 that Saudi Arabia's Saudi Basic Industries Corp. (Sabic) priced at Treasuries plus 130 bps were quoted Thursday at Treasuries plus 151 bps, a trader said.

Citigroup, HSBC Securities, Mizuho Securities and RBS Securities Inc. are the bookrunners for the Regulation S deal.

Dubai Holding to repay bond

A positive story about Dubai Holding's plan to repay its €750 million bond due in January 2014 from available funds took the company's sterling notes due 2017s to z-spread plus 371 bps on the bid side, a trader said.

"Having paid down the yen deal this year, I'd always assumed the 2014s would be fine," she said. "So in three months' time the sterling 2017s will be the only Dubai Holding bonds out there. Granted, it's been a wild ride over the past five years on these bonds, but people who stuck with them have done very well."

Meanwhile, Dubai-based DP World's bonds were a bit wider on the week, another trader said.

"But it's still a good month," he said.

Bulgarian corporate sets talk

Bulgarian Energy Holding EAD set talk at mid-swaps plus 325 bps for its planned €500 million issue of five-year notes, a market source said.

The Regulation S issue is expected to price on Thursday.

Citigroup and Raiffeisen Bank International are the bookrunners for the Regulation S deal.

A roadshow concluded on Wednesday in Vienna.

The company previously announced plans to issue €250 million of notes this fall.

The issuer is based in Sofia, Bulgaria.

Ananda gives guidance

Thailand's Ananda Development PCL gave initial price guidance in the 9½% area for its upcoming issue of perpetual notes denominated in renminbi, a market source said.

Barclays, Citic Securities and CIMB are the bookrunners for the Regulation S deal.

The notes could price as soon as Thursday.

In February the company announced its board of directors had approved up to 3 billion baht of debentures.

The real estate developer is based in Bang Phli, Samut Prakan, Thailand.

Jordan receives U.S. guarantee

Jordan's recent $1.25 billion 2.503% notes due 2020 that priced at par were issued with a U.S. guarantee, according to an announcement from the sovereign.

The notes came to the market on Oct. 28 at a yield of 2.503%, or Treasuries plus 60 bps.

Citigroup, HSBC and JPMorgan were the bookrunners for the deal.

The loan guarantee agreement - a 100% guarantee of the repayment of principal and interest by the U.S. government - was signed on Aug. 14 in Amman, following a visit in March from President Barack Obama.

The proceeds will be used to reinforce the sovereign's economic reform program, supported by the United States Agency for International Development (USAID).

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