Serbia, Promsvyazbank do deals; spreads widen before holiday; Russian issues get attention

By Christine Van Dusen

Atlanta, Feb. 15 - Serbia and Russia's Promsvyazbank priced new deals on Friday as most issues moved wider and emerging markets investors prepared for the long Presidents' Day holiday weekend.

Spreads ended the week a touch wider, with the Markit iTraxx SovX index spread finishing up at 172 basis points over Treasuries and the corporate index spread at 225 bps.

"Long-end Turkey is 1 bp to 2 bps wider," a London-based analyst said. "In Russia, the Vnesheconombank (VEB) dual-tranche deal is trading wide of re-offer."

VEB recently priced a €1.5 billion two-tranche issue of notes due 2018 and 2023 during the week via bookrunners Barclays, Commerzbank and ING, a market source said.

The Regulation S deal included €1 billion 3.035% notes due 2018 that priced at par to yield 3.035%, or mid-swaps plus 195 bps.

The second tranche consisted of €500 million 4.032% notes due 2023 that priced at par to yield 4.032%, or mid-swaps plus 215 bps.

"The 10-year is 7 bps wider and the five-year is 8 bps wider," she said.

The recent notes from Romania - a $1.5 billion issue of 4 3/8% notes due 2023 that priced at 98.963 to yield 4½%, or Treasuries plus 249 bps - traded Friday at 99¾ bid, a trader said.

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

In other news, emerging markets bond funds saw inflows of $1.1 billion for the week ended Feb. 13, according to data tracker EPFR Global. That's down slightly from the previous week's $1.3 billion.

The flows were evenly balanced, with $526 million going to local currency and $422 million to hard currency, with blended funds taking the balance.

Russia in focus

Taking another look at bonds from Russia, the sovereign's 2030s moved down in trading, according to a report from UFS Investment Co.

"Several corporate issues also underperformed the wider market," the report said.

Indeed, OJSC VimpelCom's existing notes have lost value since the placing of the new 5.2% notes due 2019 and 5.95% notes due 2023, both of which priced at par.

"The new eurobond VimpelCom 2019 added 1% and closed at 101% of the face value," UFS said. "At the same time, VimpelCom 2023 stayed near the nominal value."

Meanwhile, the recent issue of 4.204% notes due in 2018 from Russia's OJSC PhosAgro moved up about 15 bps. That issue, which priced at par to yield mid-swaps plus 320 bps, was "placed without a premium to the fair yield," UFS said.

Ukraine bonds mostly unchanged

From Ukraine, trading activity was muted at the end of the week, said Svitlana Rusakova of Dragon Capital.

Most bonds didn't move much, with the sovereign's 2017s quoted at 108½ bid, 109½ offered and the 2022s unchanged at 101½ bid, 102½ offered.

"The corporate sector also stood quiet, with some demand seen in less-liquid high yield bonds," she said.

Serbia prices notes

In its new deal, Serbia priced a $1.5 billion issue of 4 7/8% notes due 2020 at 98.401 to yield 5.15%, or Treasuries plus 378.4 bps, a market source said.

The notes priced tighter than talk, set at the 5.2% area.

Barclays, Deutsche Bank and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Promsvyazbank sells bonds

The primary market also saw Russia-based lender Promsvyazbank price a $200 million add-on to its subordinated tier 2 notes due 2019 to yield 9%, a market source said.

HSBC, JPMorgan and Promsvyazbank were the bookrunners for the Regulation S deal.

"The initial target was more than four times oversubscribed," said Artem Konstandian, president of Promsvyazbank, in a statement.

The original issue totaled $400 million and priced at a 10.2% yield.

Other details of the new deal were not immediately available on Friday.

Ghana outlook downgraded

In other trading at the end of the week, Ghana was in focus, as the sovereign's outlook from Fitch Ratings was downgraded to negative as a result of the country's fiscal deficit and potentially worsening debt dynamics.

Ghana's 8½% notes due 2017 closed Friday at 114¾ bid, 116¼ offered. On Thursday the notes were seen at 115.12 bid, 116.62 offered.

"Zambia, in the past 24 hours, has traded decent size between 100¼ and 1001/2," a trader said.

ADIB dips

Abu Dhabi Islamic Bank's recent $1 billion issue of 6 3/8% perpetual Islamic bonds was quoted Friday at 103½ bid, 104 offered, a trader said.

On Thursday, the notes were seen at 104.10 bid, 104.45 offered.

The sukuk priced at par to yield 6 3/8% via Abu Dhabi Islamic Bank, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S-only deal.

The final book was $15.5 billion.

In other trading from the Middle East, Bahrain's sovereign bonds received some attention at the end of the week.

The sovereign's 2020s were down at 109¼ while the 2022s fell to 1125/8, a trader said.

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