Risk appetite continues to grow; Turkey, Russia, Kazakhstan see bids; Minsur trades up

By Christine Van Dusen

Atlanta, Feb. 5 - The emerging markets assets that last week suffered from risk aversion continued to regain favor on Wednesday, with bonds from Turkey and the Middle East strengthening in trading.

But volumes remained somewhat low, and the primary market was quiet.

"Liquidity, of course, remains dire and the Street is short similar names," a London-based trader said. "But net-net, the market is very well supported."

Buyers were noted for Russia's OAO Gazprom, VTB Bank and Vnesheconombank while bids continued to surface for bonds from Turkey, Central and emerging Europe, Russia and Kazakhstan, a London-based analyst said.

"EM is opening confidently again, with Turkish sovereign cash 3 basis points tighter," she said. "The Middle East remains as strong as ever."

Bonds from OAO Rosneft, meanwhile, were unchanged after tightening on the back of a large buyer on Tuesday, a trader said.

"One-way traffic," the London-based trader said. "Plenty of semi-pros chasing offers for what feels like some decent-sized orders to add. A technical and very well supported market."

Better bids came in for Latin American corporate bonds on Wednesday, a New York-based trader said.

"Some decent buying as off-the run names that have been illiquid and beaten down are now looking much better," he said. "But they surely aren't the belle of the ball quiet yet."

Several credits tightened in during the session, including Brazil's Petrobras and Vale SA, he said.

"Colombian and Mexican banks seem to be the outliers as they continue to trade weakly," he said. "Chile banks better bid and corporates are flourishing nicely."

In other trading from Latin America, Chile's Empresa Nacional del Petroleo (ENAP) narrowed while some corporates from Peru saw improved trading on Wednesday, the New York trader said.

Minsur moves higher

Peru-based Minsur SA's recent $450 million issue of 6¼% notes due 2024 moved higher in trading on Wednesday, the New York trader said.

The notes priced at 98.183 to yield 6½%, or Treasuries plus 383 bps, via Scotiabank, BofA Merrill Lynch and JPMorgan in a Rule 144A and Regulation S deal.

The proceeds will be used for debt repayment and for general corporate purposes.

"Minsur's 2024s have moved up nicely to 991/2," he said. "Street volumes are decent but not strong."

Emaar gets upgrade

Dubai-based Emaar Properties received some attention on Wednesday after Standard & Poor's upgraded the credit to investment grade for the first time in four years, a trader said.

"The Emaar upgrade to investment-grade pours a little more petrol on the already well established fire and the market takes another leg higher," he said. "Emaar, for the record, is 15 bps to 20 bps tighter after the rating move."

The company's 2019s closed out 30 bps tighter, he said.

Bahrain up, Senegal tightens

Bonds from Bahrain climbed on Wednesday, a trader said.

"There's just no paper for sale. The credit is 40 bps to 50 bps better over the month now," he said.

And bids were spotted for Bahrain Telecommunications Co.'s 2020 dollar bonds, he said.

"This morning I bid some Batelco 2020s at 96 5/8 and was the cover," he said during the European afternoon. "The bond is just going down now in the Street at 95."

From Africa, Senegal's bond spreads narrowed, the London trader said.

"Cheeky bids for Senegal 2021 dollar notes in the market," the London trader said. "That's 30 bps tighter on the week."

Ukraine quiets

Activity for bonds from Ukraine was limited at mid-week, following a largely unproductive parliamentary meeting, said Svitlana Rusakova of Dragon Capital.

"With yesterday's parliamentary session yielding no result, the market was quiet and unchanged for most of the day," she said.

But the broader risk-on attitude of EM investors spurred some buying of Ukrainian assets, she said.

"We also saw two-way flows in the corporates, with quasi-sovereign banks going better-bid," she said.

Kexim sells franc notes

On Tuesday, Export-Import Bank of Korea (Kexim) priced a two-tranche issue of CHF 225 million notes due in 2017 and 2019, a market source said.

The deal included CHF 125 million floating-rate notes due 2017 that priced at par to yield Libor plus 45 bps.

The second tranche of CHF 100 million 1 1/8% notes due 2019 priced at 100.266 to yield mid-swaps plus 92.5 bps.

Credit Suisse and UBS were the bookrunners for the deal.

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