EM investors have the holiday spirit; Russian corporates outperform; Latvia plans notes

By Christine Van Dusen

Atlanta, Dec. 19 - Emerging markets investors remained in a positive pre-holiday mood on Wednesday - feeling particularly warm and fuzzy about corporate bonds - amid tighter spreads and solid performance from Russia's corporate issues.

"The year-end good tone continues," a London-based analyst said.

The Markit iTraxx SovX index spread was 2 basis points tighter at the start of the session, as was the corporate index. Volumes remained somewhat light.

Market sources were also paying close attention to Greece, which received an upgrade overnight from Standard & Poor's due to the sovereign's economic reforms and the conclusion of its bond buyback program.

"The Greek 10-year is 45 bps tighter this morning," the analyst said.

From Russia, the higher-yielding names stood out the most.

"The Vimpelcom curve was tighter again by 16 bps today and Evraz Group by 15 bps," she said.

VTB Bank, Sberbank, Rosneft and Gazprombank were also in demand on Wednesday.

And investors remained keen on bonds from Turkey.

"We have seen takeout in GarantiBank, Yapi Kredi, Halkbank, Isbank and Akbank names over the last 24 hours," she said. "The thinning market liquidity is not helping to dampen these moves into year-end."

Though selling was reported for bonds on the long end of Ukraine's curve, prices responded modestly to the news of the president's abruptly canceled visit to Moscow and the speculation as to why, said Svitlana Rusakova of Dragon Capital.

The sovereign's 2020s were seen about 1/4-point lower, as were the 2021s.

The 2017s were unchanged at 108.75 bid, 109.75 offered.

"Oschadbank lost about a half-point," she said. "In the corporate sector, Mriya Agro Holdings remained a sought-after story at 100.50 bid, 102 offered."

TAQA in focus

In other trading, the recent notes due 2023 from Abu Dhabi National Energy Co. (TAQA) remained in focus on Wednesday.

The notes traded at 102 bid, 102.5 offered after pricing at 99.404.

"It feels like some paper has come out recently on the new 2023s, but it's merely just moving back in line with the secondary on a z-spread basis," a trader said.

The deal also included $750 million 2½% notes due 2018 that priced at 99.483 to yield Treasuries plus 200 bps.

BNP Paribas, Citigroup, HSBC and Standard Chartered were the bookrunners for the deal.

SECO trades up

Notes from Saudi Electricity Co. ticked up in trading on Wednesday, with the 2017s seen at 103.20 bid, 103.50 offered after the previous day's 103.16 bid, 103.46 offered, a trader said.

The company's 2022 notes - which traded Tuesday at 108.17 bid, 108.47 offered - were quoted Wednesday at 108.20 bid, 108.50 offered.

And Dubai Water and Electricity Authority's 2015 notes traded Wednesday at 113 bid, 113.75 offered after Tuesday's 113.25 bid, 113.75 offered.

DEWA's 2020s hovered near 123.12 bid, 123.87 offered on Wednesday. On Tuesday the notes were spotted at 123 bid, 123.75 offered.

Qtel gets attention

Also from the Middle East, the recent $1 billion issue of 3¼% notes due 2023 from Qatar Telecom QSC (Qtel) that priced at 98.721 through subsidiary Qtel International Finance Ltd. traded Wednesday at 99.80 bid, 100.13 offered, a trader said.

Barclays, HSBC, Mitsubishi UFJ, Mizuho Securities, Morgan Stanley and QNB Capital were the bookrunners for the Rule 144A and Regulation S transaction.

Bahrain's 2014 notes traded Wednesday at 106.37 bid, 107.37 offered, unchanged from Tuesday. The sovereign's 2022s were also unchanged at 110.50 bid, 111.25 offered.

Morocco in demand

From Africa, Morocco's dollar notes saw significant demand on Wednesday, a London-based trader said.

The sovereign recently priced an issue of 4¼% 10-year notes at 99.228. On Wednesday the notes closed at 100.5 bid, 101 offered. On Tuesday the notes were quoted at 100.25 bid, 100.75 offered.

Morocco's 5½% 30-year bonds that priced at 97.464 traded Wednesday at 99 bid, 104 offered after Tuesday's 99.5 bid, 101.5 offered.

Barclays, BNP Paribas, Natixis and Citigroup were bookrunners for the Rule 144A and Regulation S deal.

Investec unchanged

Meanwhile, South Africa-based Investec Ltd.'s 2017s were seen trading on Wednesday at 100.625 bid, unchanged from Tuesday.

"Still clicking along," a trader said. "Angola is a shade heavy. Zambia is holding just below par. Nigeria is impressively well bid."

Latvia deal ahead

In deal-related news, Latvia is planning to issue $4 billion in notes in 2013 or 2014, a market source said.

The proceeds will be used to refinance the sovereign's 2014 bonds and its bailout from the International Monetary Fund and the European Union.

No other details were immediately available on Wednesday.

© 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.