Korea Exchange, Colombia Telecom, Fantasia, Citic do deals on active but weaker day for EM

By Christine Van Dusen

Atlanta, Sept. 20 - Korea Exchange Bank, Colombia Telecomunicaciones SA and two issuers from China - Fantasia Holdings Group Co. Ltd. and Citic Bank International - printed notes on an active but mostly weaker Thursday for emerging markets assets.

"Weak economic data from Japan, China, Europe and the United States are lending to the overall weakness," a New York-based trader said.

Many emerging markets investors were pausing for breath, a London-based trader said, though flows remained mostly balanced and some bonds were busy in trading.

"Total mixed bag today, once again, depending on technicals and Street positions," he said.

Issues from Central and Eastern Europe, Latin America and Asia were particularly active on Thursday while those from the Middle East and North Africa lagged a bit.

"Seasoned Gulf region-watchers know, however, that in recent years the fourth quarter has been the most active on the new issue front," a trader said. "Some bank paper feels a little well offered to me, indicating that perhaps some bank names are looking at long five-year and seven-year deals, which would for the most part be welcomed, given the demand for solid bank names from the Gulf region."

Meanwhile, the recent $1.5 billion issue of 2.803% sukuk notes due 2018 from Turkey continued to take a beating.

"It's worth mentioning the poor effort of the Turkey 2018 sukuk," a trader said. "Clearly there are still too many loose bonds in the wrong hands."

The notes - which priced at par via Citigroup, HSBC and Kuwait Liquidity House - ended Thursday's European session at 98.50 bid, 99 offered.

"It got hit early at 99.50 by a semi-pro," a trader said. "It turns out they sold a lot. The bond is feeling a bit 'ugh.'"

Zambia lags

The recent issue from Zambia also struggled somewhat on Thursday, closing 7 bps wider at 101.55 bid, 101.85 offered, a trader said.

The notes priced last week at 98.108 with bookrunners Barclays and Deutsche Bank in a Rule 144A and Regulation S deal.

"But it does feel like there are some buyers on the bid side in the market," he said. "It's a quieter day than yesterday, flow-wise, but like yesterday most bonds are clearing between 101.60 and 101.75."

African spreads widen

In other trading from Africa, most names were wider on the Treasury move, a trader said.

"But if anything, it still feels like there are some buyers around, especially of Gabon, Ghana, Angola and even Zambia on the bid side," he said.

South Africa's five-year credit default swaps were at 142 bid, 147 offered as the sovereign's bonds moved wider.

"African Bank Investments holds well," he said. "With the rest it feels like there's some paper around, especially on Eskom Holdings."

DEWA notes pause

Notes from Dubai Electricity and Water Authority paused on Thursday after a "decent" move, a trader said. The company's 2020s are 10 basis points wider on the week while the 2017s are 15 bps wider.

"I managed to trade some RasGas long-end today between two and three accounts we knew were involved," he said. "It's not a name or a bond that needs to be shown to the market, as there is still good interest in the name."

Abu Dhabi in focus

Abu Dhabi National Energy Co.'s notes felt a little bit heavy, a trader said.

"It's hard to shift paper, for some reason, with the exception of the long 2036s, which are very well sought after again," he said.

In other news from Abu Dhabi, lender Abu Dhabi Islamic Bank is seeking to sell up to $5 billion of bonds.

Investors remained interested in International Petroleum Investment Co.'s dollar bonds, a trader said.

"The euro and sterling notes remain a little sticky," he said. "Abu Dhabi Islamic Bank is trading a little heavy."

Vale, Petrobras paper widen

In trading from Latin America, spreads widened early in the day on the long end of such names as Brazil-based Vale SA, in part due to U.S. Treasury moves, a New York-based trader said.

"[Petroleo Brasileiro SA] paper is also wider by 5 bps, approximately," he said. "Street volumes in Lat Am corporates are light, bids are pulled back on all credits - both high-grade and high-yield - but we have not seen bids getting hit. But that could be attributed to the fact that the bids have been pulled back a bit too far to hit."

By the end of Thursday's session, most higher-rated credits ended with their spreads nearly unchanged. Argentina was an outperformer while Venezuela underperformed, he said.

"Argentina keeps its positive momentum," another trader said. "Venezuela trades off as oil drops, elections approach and accounts look to pare risk in a thin market."

KEB, Fantasia price notes

In its new deal, Seoul-based Korea Exchange Bank sold $300 million 1¾% notes due Sept. 27, 2015 at 99.843 to yield 1.804%, or Treasuries plus 155 bps, a market source said.

Barclays, Commerzbank, KEB Asia and Standard Chartered were the bookrunners for the Regulation S-only deal.

Chinese property development company Fantasia Holdings priced $250 million 13¾% notes due Sept. 27, 2017 at 99.472 to yield 13.9%, according to a company filing and a market source.

Bank of America Merrill Lynch, UBS and ICBC were the bookrunners for the Regulation S deal.

Proceeds will be used to fund existing and new property projects, to refinance existing indebtedness and for general corporate purposes.

Colombia Telecom sells bonds

In another new deal on Thursday, Bogota-based Colombia Telecomunicaciones priced a $750 million issue of 5 3/8% notes due Sept. 27, 2022 at par to yield 5 3/8%, a market source said.

The notes were talked at a yield of 5½% to 5¾%.

Credit Suisse, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal, which initially included a 10-year tranche denominated in Colombian pesos.

Prior to pricing, the dollar notes traded up about 1/4- to 3/4-point in the gray market, a trader said.

And China's Citic Bank priced $300 million 3 7/8% notes due Sept. 28, 2022 at 99.284 to yield Treasuries plus 325 bps via HSBC, RBS, BBVA and Nomura in a Regulation S deal.

The notes priced at the tight end of talk, set at Treasuries plus 325 basis points to 330 bps.

Grupo Aval, Lithuania do deals

These new deals followed the late-Wednesday pricing of Colombian banking company Grupo Aval Acciones y Valores SA's $1 billion issue of 4¾% notes due Sept. 26, 2022 at 99.607 to yield 4.8%, or Treasuries plus 301.8 bps.

Goldman Sachs and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

"The new Grupo Aval 2022s are trading just above fixed reoffer," a New York-based trader said.

Also on Wednesday, Lithuania printed a CHF 175 million issue of 2% notes due April 11, 2018 at 99.778 to yield mid-swaps plus 165 basis points, a market source said.

BNP Paribas and Credit Suisse were the bookrunners for the deal.

BTG Pactual gives guidance

In other deal-related news, Brazil-based lender BTG Pactual SA set price talk at the 6 1/8% area for a dollar-denominated issue of 10-year notes, a market source said.

Bradesco BBI, BTG Pactual, Citigroup and Deutsche Bank are the bookrunners for the Rule 144A and Regulation S deal, which is expected to price on Friday.

Hardware and home-improvement products retailer Maestro Peru set the size at $180 million and the tenor at seven years for its planned Rule 144A and Regulation S deal via Bank of America Merrill Lynch and JPMorgan.

Sanluis Rassini taps agents

Mexican auto parts company Sanluis Rassini mandated Bank of America Merrill Lynch and JPMorgan for a roadshow to market a possible issue of notes, a market source said.

The marketing trip for the Rule 144A and Regulation S deal will begin Sept. 24 in London and travel to Geneva, Zurich, New York, Boston and Los Angeles before concluding on Oct. 1 in Santiago.

Panama-based toll road operator ENA Norte Trust wrapped up a roadshow via HSBC and Global Bank on Thursday ahead of a planned issue of $600 million bonds due 2028.

Plaza Centers eyes bonds

Plaza Centers NV - an Amsterdam-based but emerging markets-focused developer of shopping and entertainment centers - has mandated Bank of America Merrill Lynch to arrange a roadshow for a possible issue of dollar notes, a market source said.

The roadshow will begin Sept. 23 and travel through Israel, London, Switzerland and Asia before wrapping up on Oct. 3.

A Regulation S-only transaction may follow.

Gazprombank oversubscribed

The final book for Russia-based Gazprombank's RUB 15 billion issue of 8.617% notes due 2015, which priced at par, was more than RUB 34 billion with more than 100 investors involved, a market source said.

About 36% of the orders came from the United States, 23% from Russia, 21% from the United Kingdom, 17% from Europe and 3% from Asia.

Fund managers accounted for 65%, banks 34% and others 1%.

Barclays, Citigroup, HSBC and GPB Financial Services were the bookrunners for the Regulation S deal.

Alfa Bank notes see demand

Also oversubscribed was the new deal from Russia's Alfa Bank, an issue of $750 million 7½% notes due 2019 that came to the market at par via Alfa Bank, Credit Suisse and UBS.

The deal drew $2.4 billion in orders from 175 investors, with 34% from the United States, 28% from the United Kingdom, 22% from the rest of Europe, 10% from Asia and 6% from Russia.

Managed funds snapped up 54%, private banks 30%, hedge funds and insurance companies 11% and banks 5%.

Ukraine tap attracts investors

The final book for Ukraine's $600 million tap of its 9¼% notes due 2017 was $1.4 billion, a market source said.

The deal came to the market at 107.125 with leads JPMorgan, Morgan Stanley, Sberbank CIB and VTB Capital.

About 37% of the orders came from the United Kingdom, 33% from Continental Europe, 26% from the United States and 4% from Asia.

Banks accounted for 13%, hedge funds 32%, pension funds 2% and others 4%.

NLMK deal popular

The new $500 million issue of 4.95% notes due 2019 that priced at par from Russia's Novolipetsk Steel (NLMK) attracted more than $4.5 billion in orders from more than 300 investors, a market source said.

About 28% came from the United Kingdom, 23% from Switzerland, 20% from the United States, 18% from Europe, 9% from Asia and 2% from others.

Asset and fund managers took up 60%, banks and private banks 32% and hedge funds 8%.

The Rule 144A and Regulation S deal was led by Deutsche Bank, JPMorgan and Societe Generale.

The NMLK notes were active in trading on Thursday, quoted early in the session at 99.65 bid, 99.80 offered and later at par bid, 100.15 offered.

Aleesia Forni contributed to this article.

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