New issues from Costa Rica, Peru's TGP, Ukraine's DTEK; flows improve; new QNB paper eyed

By Christine Van Dusen

Atlanta, April 23 - Costa Rica, Transportadora de Gas del Peru SA and Ukraine's Donbass Fuel & Energy (DTEK) sold notes on Tuesday amid improved flows and wider spreads for emerging markets assets.

"There's been a decent pick up in activity after yesterday's quiet session," a trader said.

The Markit iTraxx SovX CEEME ex-EU index moved 3 basis points wider to Treasuries plus 198 bps on Tuesday. The corporate index - which was seen Monday at 238 bps over Treasuries - widened by 2 bps.

"Long-dated assets caught a decent bid on the back of the move on rates," a London-based trader said.

Among them were Qatar's 2040s and 2042s, Saudi Electricity Co.'s 2043s, Qtel International's 2043s and DPWorld's 2037s, he said.

"All popular," he said. "Long-dated Qatar is going out the best part of 30 bps tighter on the month now."

Notes from Bahrain remained steady, he said.

"Lebanon remains well-offered and lackluster at the moment," he said. "Getting harder to find value but there remain some names on spread that I think are appealing."

Many market-watchers were focusing Tuesday on the new issue of 2 7/8% notes due 2020 from Qatar National Bank SAQ, which came to the market Monday at 99.216 and opened Tuesday at 99.26 bid, 99.41 offered.

"Good start for the new QNB," a trader said. "Seeing good interest from Swiss accounts."

Tuesday also saw Turkey's TF Varlik Kiralama AS and India's Oil and National Gas Corp. Ltd. (ONGC) prepping new deals for the primary market.

QNB notes active

As the morning went on, Qatar-based QNB's new notes moved to 99.30 bid, 99.45 offered and then 99.33 bid, 99.43 offered.

By the European afternoon, the notes were trading at 99.35 bid, 99.43 offered. As the close neared, the notes moved to 99.40 bid, 99.50 offered.

"Very steady effort," another trader said. "The range traded here from 99.35 to 99.50. The last prints were at 99.40."

The final book was $2.8 billion from 195 accounts, a market source said.

About 35% of the orders came from the Middle East and North Africa, 25% from Europe, 15% from Asia, 13% from the United Kingdom and 12% from the offshore United States.

Fund managers picked up 39%, banks 33%, insurance and pension funds 11%, private banks 9%, central banks and agencies 3% and others 5%.

Deutsche Bank, HSBC, JPMorgan, Mitsubishi UFJ Securities, Qatar National Bank and Standard Chartered Bank were the bookrunners for the Regulation S deal.

ADIB's perpetuals perform

The recent perpetual notes that Abu Dhabi Islamic Bank priced at par opened Tuesday at 106.12 bid, 106.62 offered while the perpetuals from Dubai Islamic Bank - which also priced at par - moved to 101.81 bid, 102.31 offered.

Sharjah Islamic Bank's recent issue of sukuk notes due in 2018 that priced at par traded Tuesday at 99.75 bid, 99.90 offered.

And Dubai's 2023s and 2043s were solid performers on Tuesday, a trader said.

Polyus Gold notes get support

The new issue of notes from EM-focused Polyus Gold International Ltd. - $750 million 5 5/8% notes due 2020 that priced at par - saw some support in trading on Tuesday morning.

"Trading at 101 this morning," a trader said.

JPMorgan, Societe Generale and VTB Capital were the bookrunners for the deal, the proceeds of which will be used for general corporate purposes.

Demand for Lukoil

Russia's OAO Lukoil saw strong demand on Tuesday for its new two-tranche issue of $3 billion notes due in 2018 and 2023, issued with bookrunners BNP Paribas and Citigroup.

The deal included $1.5 billion notes due 2018 that priced to yield mid-swaps plus 270 bps and $1.5 billion notes due 2023 that priced to yield mid-swaps plus 285 bps.

The proceeds will be used for general corporate purposes.

And Russia-based fertilizer and phosphates company OJSC PhosAgro saw its recent issue of 4.204% notes due 2018 move 5 bps tighter on Tuesday after pricing at par.

Citigroup, Raiffeisen Bank, Sberbank and VTB Capital were the bookrunners for the Rule 144A and Regulation S deal.

Isbank's bonds tick up

From Turkey, some small selling was reported for corporate while the new tap of Turkiye Is Bankasi AS' (Isbank) 3¾% notes due 2018 settled at 101.

The notes priced at 100.983 to yield 3.55% with Barclays, Citigroup, Deutsche Bank, HSBC and JPMorgan in a Rule 144A and Regulation S deal.

The original $500 million issue of notes priced earlier this month at 99.323 to yield mid-swaps plus 285 bps.

Issuance from Costa Rica

Costa Rica priced a $1 billion issue of notes due April 30, 2025 and 2043 (Baa3/BB/BB+) via bookrunners Barclays and Deutsche Bank in a Rule 144A and Regulation S deal, a market source said.

The deal included $500 million notes due 2025 that priced at par to yield 4 3/8%. The notes were talked at a yield in the 4 5/8% area.

The second tranche totaled $500 million notes due 2043 that priced at par to yield 5 5/8%. The notes were talked at a yield in the very high-5% area.

Proceeds will be used to refinance debt.

DTEK does deal

Ukraine-based energy holding company DTEK priced a $150 million add-on to its existing 7 7/8% notes due April 4, 2018 at 98.989 to yield 8 1/8%, a market source said.

The notes were talked at a yield of 8 1/8%

VTB Capital, Deutsche Bank, ING, JPMorgan, Sberbank and Unicredit were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes, including the financing of ongoing capital expenditure programs and for working capital and repaying of debt, according to a statement from the company.

The original $600 million issue of 7 7/8% notes due 2018 priced at 98.989 to yield mid-swaps plus 713 bps.

TGP sells notes

Peru-based gas transporter TGP sold $850 million 15-year notes at par to yield 4¼%, following talk in the 4% area.

BofA Merrill Lynch, Morgan Stanley, BBVA, Citigroup and Itau BBA were the bookrunners for the Rule 144A and Regulation S deal.

Also from Latin America, Brazil's Construtora Andrade Gutierrez SA (CAG) launched a $500 million issue of notes due in 2018 at 4 1/8%, a market source said.

The notes were talked at a yield in the 4¼% area.

BTG Pactual, JPMorgan and Espirito Santo are the bookrunners for the transaction.

Uralkali sets talk

Russia's Uralkali gave price guidance in the mid-swaps plus 300 bps area for its five-year offering of dollar notes, a market source said.

BofA Merrill Lynch, Goldman Sachs, Sberbank and VTB Capital are the bookrunners for the Rule 144A and Regulation S deal.

Uralkali is the world's largest producer of potash.

CBM deal ahead

Russia's Credit Bank of Moscow was on an analyst's mind on Tuesday ahead of its planned issue of dollar-denominated notes.

The deal is expected to total as much as $400 million with a minimum tenor of 5½ years, the London-based analyst said.

"CMB is the pioneer in the sector, taking an opportunistic approach to improve further its capital cushion," she said. "We view this tier 2 issue as an opportunistic deal, which will enhance the capital buffer and support its financial soundness. We remain constructive on the credit."

The company's outstanding dollar notes, a five-year issue that came to the market in January at a 7.7% yield, have performed strongly, she said.

Norilsk Nickel on roadshow

Another issuer from Russia - OJSC MMC Norilsk Nickel - has a deal on deck. The company is looking to issue up to $1.5 billion in Regulation S-only notes with a minimum tenor of five years, the analyst said.

"A longer-dated tranche is also an option," she said.

The notes are being marketed on a roadshow.

"There was no clarity as to the frequency of issuance going forward, which will depend on their funding needs and the general condition of their operating environment," she said. "We view the group as one of Russia's best-quality miners with strong fundamentals and cash flow generation. However, uncertainties remain."

Varlik Kiralama sets guidance

Turkey's Varlik Kiralama set initial price talk in the low-4% area for an upcoming issue of five-year dollar-denominated Islamic bonds, a market source said.

The Regulation S sukuk is expected to be benchmark-sized.

Citigroup, HSBC, NCB Capital and Noor Islamic Bank are the bookrunners for the deal, which could price as soon as Wednesday.

The notes include a change-of-control put if National Commercial Bank ceases to own 51% of the company.

India's ONGC taps bookrunners

India-based ONGC has mandated Citigroup, Deutsche Bank and RBS for a roadshow to market an offering of dollar-denominated notes, a market source said.

The roadshow will begin on Wednesday, and a Regulation S-only deal is expected to follow.

KMG ends marketing trip

The roadshow for Kazakhstan-based gas company KazMunaiGaz National Co.'s (KMG) dollar notes ended on Tuesday, the analyst said.

"Potential maturities for the deal could stretch from 10 to 30 years with a size above $1.5 billion," she said. "Given the quasi-sovereign characteristics of the credit, we expect it to be well received by investors, dependent on pricing."

BofA Merrill Lynch, Barclays, Halyk Finance and Visor Capital are the bookrunners for the Rule 144A and Regulation S deal.

Tata deal oversubscribed

The final book for the S$150 million add-on to the 4¼% notes due 2016 from Tata Communications Ltd. was S$360 million from 56 investors, a market source said.

The notes - through Tata Communications (Netherlands) - priced at 101.25 to yield 3.766% via ANZ, DBS Bank, RBS and Standard Chartered Bank in a Regulation S deal.

About 84% of the orders came from Singapore, 15% from Hong Kong and 1% from others. Fund managers accounted for 45%, banks 30%, private banks 23% and others 2%.

The original S$250 million issue of notes priced in January.

Investors like Daegu

Also oversubscribed was Korea-based Daegu Bank Ltd.'s $300 million issue of 2¼% five-year notes that priced at 99.986 to yield 2.253%, or Treasuries plus 155 bps.

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

The transaction drew $1.8 billion in orders from 120 accounts.

About 85% of the orders came from Asia and 15% from Europe, with 70% from fund managers, 16% from banks, 7% from private banks and 7% from insurance and the public sector.

Big book for Panama

The $750 million issue of 4.3% 40-year notes that Panama priced at par to yield Treasuries plus 139.7 bps attracted $4.5 billion in orders.

About 284 accounts were involved, with asset managers accounting for 72%, hedge funds 9%, bank portfolios 6%, insurance 6%, private banks 5% and pension funds 2%.

BofA Merrill Lynch and Credit Suisse were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used to partially fund the sovereign's 2013 budget.

UBI attracts orders

Union Bank of India's new issue of $350 million 3 5/8% notes due Oct. 25, 2018 that came to the market at 99.679 to yield Treasuries plus 300 bps drew an order book of about $1.5 billion from 136 accounts, a market source said.

BofA Merrill Lynch, Barclays, BNP Paribas, Citigroup, JPMorgan and Standard Chartered were the bookrunners for the Regulation S deal.

About 68% of the orders came from Asia and 32% from Europe, with 72% from banks, 16% from private banks and 12% from asset managers, fund managers, sovereign wealth funds and corporates.

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