Chile's AES Gener sells bonds; EM spreads widen; Emaar bonds eyed; Russian bonds decline

By Christine Van Dusen

Atlanta, Dec. 12 - Chile's AES Gener sold notes on a Thursday that saw better buyers of Russian corporate bonds and the 2019 notes from Dubai's Emaar Properties as spreads widened.

Ukraine also remained in the headlines, as protests continued.

The Markit iTraxx SovX CEEME ex-EU index spread on Thursday opened at 319.5 basis points, wider from Wednesday's 237 bps spread. The corporate index spread - seen Wednesday at 252 bps over Treasuries - moved out 3 bps on Thursday.

"We are seeing good buyers of select Russian corporates this morning," a London-based analyst said, noting that some names were tighter by as much as 7 bps.

"Lukoil's 2020s and front-end Gazprom are also in demand," she said. "Other Russian corporates are 1 bp to 3 bps tighter, on average."

From Turkey, corporate bonds were mostly unchanged while Dubai continued to see good buyers and some tightening.

In news from Ukraine on Thursday, a diplomat for the European Union said the sovereign was likely to sign a trade agreement with the group - a possibility that seemed unlikely to protestors, who continued their fight.

In response, Ukraine sovereign bonds were down about ¼ point, a trader said.

Russia's bonds have been declining slightly since mid-week, according to a report from UFS Investment Co.

Spreads on the sovereign's 30-year bonds have been mostly flat since Wednesday.

"In the evening, data on U.S. retail sales and claims for unemployment benefits will have little impact on the state of the markets," the report said.

Emaar Properties outperforms

A particular standout from the Middle East on Thursday was Emaar Properties' 6.4% bonds due in 2019, which priced in July at par.

"Emaar's 2019s are outperforming, about 10 bps tighter this morning," the analyst said.

This came as the Dubai-based property developer signed a memorandum of understanding to develop an urban center at the Expo 2020 site.

"With rates at 2.85% and no more supply until 2014, we're seeing decent support for most Dubai names," a trader said. "The 2019s are the best part of 45 bps tighter over the month."

Al Hilal Bank, Barwa Bank, Dubai Islamic Bank, Emirates NBD Capital, HSBC, Noor Islamic Bank and Standard Chartered Bank were the bookrunners for the Regulation S-only deal.

By the close in London, the notes were trading at 1091/2.

"These things are a buy on dips," he said. "In a month's time they will, optically, be a nice little bond."

The company's 2016 notes, meanwhile, traded at 113.12 bid, 113.62 offered, about 46 bps tighter on the month.

Aldar tightens, Emirates rises

Also tightening were the 2018 bonds from Abu Dhabi-based Aldar Properties PJSC, which traded Thursday at 101.

"That's about 10 bps tighter on the week," he said.

In other trading from the Middle East, United Arab Emirates-based airline Emirates' 5 1/8% notes due June 8, 2016 that priced at 99.904 traded Thursday at 105 bid, 105.30 offered, a trader said.

The notes came to the market a yield of 5.147%, or mid-swaps plus 330 bps.

Deutsche Bank, Emirates NBD, HSBC and Morgan Stanley were the bookrunners for the Regulation S-only notes.

Hungary, Romania in focus

Most bonds from Central and emerging Europe have been mixed so far this week, apart from Hungary, which has seen week-over-week tightening across the curve, according to a report from Erste Group Research.

This came as market sources whispered about a possible $500 million issue of notes from the sovereign.

From Romania, bonds tightened between 5 bps and 10 bps on lower-than-expected inflation data, the report said.

AES Gener sells notes

In its new deal, Chilean electrical distributor AES Gener sold $450 million 8 3/8% notes due 2073, a market source said.

The notes were talked at a yield in the 9% area.

Citigroup Global Markets and Goldman Sachs & Co. are the bookrunners for the deal.

Santander unit sets roadshow

Banco Santander Mexico, a subsidiary of Spain's Banco Santander SA, will set out next week on a roadshow for an issue of $1 billion 10-year hybrid notes, a market source said.

The securities will take the form of Basel III-compliant, tier 2 subordinated notes.

Banco Santander plans to purchase about 75% of the new instruments issued by Banco Santander Mexico, as well as those not purchased by third parties, according to a release from the company.

Banco Santander is a Madrid-based bank.

Sri Lanka to issue notes

Sri Lanka is looking to issue two $750 million bonds in 2014, a market source said.

Market sources were also talking about possible upcoming issues from Thailand and Indonesia.

In other deal-related news, Honduras sold $500 million 8 ¾% notes due in 2020 on Wednesday at par to yield 8¾%, a market source said.

The deal was upsized from $250 million.

No other details on the deal were immediately available on Thursday.

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