New issue from China Poly; Almarai, Hungarian Eximbank, Modernland, Swiber line up deals

By Christine Van Dusen

Atlanta, July 29 - China Poly Group Corp. sold notes on Monday amid mixed spreads and thin volumes as investors anxiously awaited the U.S. Federal Reserve's upcoming comments on quantitative easing.

"Formal guidance on rates and QE tapering will dominate the attention of the market," according to a report from Erste Group Research. "In Central and Emerging Europe we also will see a central bank decision in Czech Republic, where S&P affirmed ratings on Friday."

Slovenia's rating also was affirmed by Standard & Poor's.

"The bonds continue to trade at elevated spreads," the report said.

The Markit iTraxx SovX CEEME ex-EU index spread on Monday opened at Treasuries plus 226 basis points, tighter from Friday's level of 252 bps. The Markit iTraxx Crossover index spread - seen Friday at 405 bps - widened to 412 bps on Monday.

"Asian markets have opened weaker this morning as Japanese data both came in below expectations and Chinese industrial profit growth slowed. US Treasuries are opening slightly stronger this morning at 2.56% as we await a busy week of data," a London-based analyst said. "A quiet Monday start. Turkey and Russia are largely opening flat to Friday.

Volumes were low and liquidity was thin, a London-based trader said.

"Some good relative value and switches available in the market as dealers short just want to cover inventory and ignore other bonds on curves that may actually be better value," he said.

Meanwhile, several issuers advanced new deals, including Saudi Arabia's Almarai, Hungarian Export-Import Bank (Hungarian Eximbank), Indonesia's PT Modernland Realty Tbk and Singapore's Swiber Holdings Ltd.

Lat-Am spreads widen

Spreads for debt from Latin America were slightly wider on Monday, a New York-based trader said.

"Argentina, Venezuela and PDVSA bonds drop by a half-point to one point," she said, noting that Venezuela's 2027s were quoted at 831/4.

"Volumes are light, but that seems normal for a Monday," she said. "Accounts were better sellers of Latin American debt, from the inquiries we saw."

Many Qatar bonds underperform

Bonds from Qatar and Qatari Diar underperformed on Monday, a trader said, while Qtel International's 2043s were popular.

"Qtel's 2043s close out at 91½ at last print, but the bond looks rich to the 2028s, to my mind," he said. "Still a few technical bonds out there, and many senior bank bonds that are very tricky to source. Two more days of July in what could be another choppy week for rates, given the slew of data and comments out of the US."

BankMuscat notes 30 bps better

Oman's BankMuscat saw its recent 2½% notes due 2018 trade Monday at 98 bid, 99 offered after pricing at 99.302, a trader said.

Citigroup, Credit Agricole CIB, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S deal.

"They're now 30 bps better on the month," the trader said.

Bahrain bonds soften

The recent $750 million issue of 6.273% notes due 2018 that Bahrain priced at par opened Monday at 100¾ bid, 101¼ offered.

Last week the high was 101 5/8.

"Bahrain is a little softer," a trader said.

BNP Paribas, Citigroup and Standard Chartered Bank were the bookrunners for the Regulation S deal.

"Bahrain's 2023s are at 101, slightly off the highs reached on Friday," the analyst said later in the day.

Two-way activity for Ruwais

Abu Dhabi-based Ruwais Power Co., a consortium led by Abu Dhabi National Energy Co. (TAQA), saw its new 6% notes due 2036 trade on Monday morning at 103 bid, 104 offered.

The notes priced at par via BNP Paribas, Citigroup, HSBC, Mitsubishi UFJ, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S deal.

"Managed some two-way flow in Ruwais Power," a trader said.

Later in the session the notes were quoted at 103.37 bid, 104.37 offered and moved on to 103.12 bid, 104.12 offered.

"The new Ruwais deal continues to perform, trading up at 103½ now," the analyst said later in the trading day.

Perpetuals in focus

The perpetual notes from Abu Dhabi Islamic Bank, which priced at par, were quoted early on Monday at 101½ bid, 102½ offered, a trader said.

Later in the European morning the notes moved to 101.12 bid, 102.12 offered.

Dubai Islamic Bank's perpetuals, which also priced at par, started the session at 97½ bid, 98½ offered.

The notes later moved to 97¼ bid, 98 offered.

"Perpetuals were, again, a little softer," he said.

Ghana bonds move down

Ghana's new 7 7/8% notes due 2023 opened Monday at 99.62 bid, 100.37 offered, a trader said.

The notes hit a high of 101 3/8 during the previous week.

Barclays and Citigroup were bookrunners for the Rule 144A and Regulation S deal.

Later in the session on Monday, the notes traded at 99¾ bid, 100½ offered.

Poly Group prints notes

In its new deal, Beijing-based business group China Poly Group priced $500 million 4½% notes due 2018 at 99.061 to yield 4.713%, or Treasuries plus 335 bps, a market source said.

Citic Securities, Credit Suisse, Deutsche Bank, HSBC, ICBC, RBS and UBS were the bookrunners for the Regulation S notes.

And Saudi Arabia-based dairy foods company Almarai has mandated Banque Saudi Fransi, BNP Paribas, HSBC and Standard Chartered Bank as bookrunners for an issue of dollar-denominated Islamic bonds.

Hungarian Eximbank talks notes

Also on Monday, Hungarian Eximbank set price talk for two tranches of notes due in 5½ years, a market source said.

The first tranche of 51/2-year notes was talked at the mid-swaps plus 90 bps area.

The second tranche of 51/2-year notes was talked at a yield in the 7% area.

HSBC and Jefferies are the bookrunners for the Rule 144A and Regulation S notes, which will be issued by Maexim Secured Funding Ltd.

Modernland mandates banks

Indonesia-based real estate company Modernland has mandated Citigroup and UBS for a dollar-denominated issue of notes that will be marketed during a roadshow.

The Regulation S deal's roadshow will begin on Tuesday and take place in Singapore, Hong Kong and London.

And Singapore-based oil and gas company Swiber set initial talk in the 6½% area for its S$150 million five-year issue of Islamic bonds via DBS and Maybank Kim Eng Securities in a Regulation S deal.

The proceeds will be used to refinance existing borrowings, for working capital and for general corporate purposes.

Odebrecht issues notes

On Friday, Brazil' Odebrecht Offshore Drilling Finance Ltd. priced a $1.69 billion issue of 6¾% notes due 2022 at 99.994, a market source said.

HSBC, Itau BBA, Morgan Stanley, BB Securities, BNP Paribas and Santander were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to pay existing project finance obligations, project costs and general corporate purposes.

Earlier in the week, Brazilian state Maranhao priced $661.976 million 5.477% notes due July 24, 2023 at 103.642 to yield 4.8% with BoA Merrill Lynch.

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