Romania prints bonds; Egypt bonds tighten, SECO lags; heavy issuance expected soon for EM

By Christine Van Dusen

Atlanta, Jan. 14 - Romania sold notes on Tuesday as U.S. Treasuries seemed to stabilize, setting the stage for a "flood of issuance" from emerging markets corporates and sovereigns, a London-based analyst said.

Meanwhile, Tuesday's trading session was mixed in the morning before improving in the afternoon, a trader said.

"Fairly busy day, all told," he said. "Bahrain remains a rock, with offer-side liquidity testing."

Kuwait-based Kipco's 2016s were a standout while Abu Dhabi and Qatar remained "solid," he said.

"The Dubai space is ticking along, although some were trying to offer it lower in the morning, after the poor stock market close," he said. "Perpetuals were in demand late in the day, as were the Emirates Islamic Bank and Abu Dhabi Commercial Bank 2023s."

Saudi Electricity Co.'s bonds were lagging their peers, he said.

"Also in Saudi Arabia, Dar al-Arkan has lagged the bid for high-yield paper seen since December," he said.

International Petroleum Investment Co.'s 3 5/8% 2023 euro bonds were squeezed on Tuesday, tightening to 103 3/8 bid, 103 7/8 offered.

"That's 21 basis points tighter on the month," he said.

From Africa, Ghana was having a rough go on Tuesday, a trader said.

"Tough start to the year for Ghana," he said. "We managed to trade Ghana 2017s two-way today. This one has been beaten up."

The notes are about 44 bps wider on the week.

"The 2023s are now 25 bps wider on the week," he said.

Elsewhere in Africa, Nigeria and Gabon traded well, with Gabon's 2024 dollar notes up at 1031/2, he said.

"Morocco is holding steady, with the dollar 2022s and 2042s on the month a good 35 bps better," he said. "Not even they can keep pace with Egypt bonds however, which are the best part of 50 bps tighter on the month."

Angola widened, trading at about 107.87 bid, 108¼ offered.

Turkey bonds suffer

Bonds from Turkey continued to suffer on Tuesday, the analyst said.

"However, we are seeing opportunistic buying of names such as long-dated Vakifbank and Isbank," she said. "Russian credit feels better supported. We have seen particular buying of Russia 2030s."

The bond's spread widened on Tuesday by 2 bps, according to a report from UFS Investment Co.

"The dynamics of the debt market will be affected by the data on US retail sales," the report said.

"The Middle East and North Africa remain a few basis points wider since Friday but are in a holding pattern ahead of the new issues that are widely expected," the analyst said.

Ukraine in focus

Looking to Ukraine, sovereign bonds have been trading within a narrow range so far this week, with most of the activity focused on the 2021s, said Svitlana Rusakova of Dragon Capital.

Ukraine-focused UkrLandFarming plc was in demand, following the news that Cargill was taking a 5% ownership interest in the agricultural company.

"Investors started to look for this illiquid bond," she said. "We also saw some flow in quasi-sovereigns, which seemed to be better offered."

Uralkali to improve

Meanwhile, Russia's Uralkali is expected to realize moderate gains as a result of its operating results for 2013, the report from UFS Investment Co. said.

"The yield decreased by 22 bps for the last six trading days, despite the fact that the reference yield of Russia's 2030s decrease over this period by only 8 bps," the report said. "We expect better retention of the issue dynamics."

Romania prices bonds

In its new deal, Romania priced a two-tranche issue of $2 billion notes due 2024 and 2044, a market source said.

The deal included $1 billion 4 7/8% notes due 2024 that priced at 98.863 to yield 5.021%, or Treasuries plus 215 bps. The notes were talked at a spread in the 220 bps area.

The second tranche of $2 billion 6 1/8% notes due 2044 priced at 98.209 to yield 6.258%, or Treasuries plus 245 bps. The notes were talked at a spread in the Treasuries plus 250 bps area.

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

Latvia gives guidance

Latvia set initial talk at mid-swaps plus 140 bps for its upcoming seven-year issue of euro-denominated and benchmark-sized notes due in seven years, a market source said.

Citigroup, JPMorgan and Societe Generale are the bookrunners for the Rule 144A and Regulation S deal.

The sovereign held a roadshow in June for a possible offering of notes via Citigroup, JPMorgan and Societe Generale.

Shimao to issue notes

Shimao Property Holdings Ltd. plans to conduct an international offering of dollar-denominated guaranteed senior notes.

HSBC and Standard Chartered Bank are the joint global coordinators, joint lead managers and joint bookrunners for the proposed Regulation S notes. Goldman Sachs, JPMorgan, UBS, Citigroup and Morgan Stanley are also joint lead managers and joint bookrunners.

Proceeds will be used to refinance existing debt, to finance existing and new property development projects and for general corporate purposes.

The real estate development company is based in Hong Kong.

Modern Land deal ahead

Modern Land (China) Co., Ltd. said it plans to conduct an international offering of renminbi-denominated senior notes.

Pricing will be determined through a bookbuilding exercise, according to a company announcement.

Morgan Stanley & Co. International plc, J.P. Morgan Securities (Asia Pacific) Ltd., Credit Suisse (Hong Kong) Ltd., Guotai Junan Securities (Hong Kong) Ltd. and CLSA Ltd. are the joint bookrunners and joint lead managers for the Regulation S offering. Morgan Stanley and JPMorgan are also the joint global coordinators.

Proceeds from the proposed notes will be used to fund existing and new property projects and for general corporate purposes.

The property developer is based in Beijing.

Femsa prints add-ons

On Monday, Mexico's Coca-Cola Femsa SAB de CV priced $350 million of add-ons to its dollar-denominated notes due 2023 and 2043 (A2), according to a company filing.

The deal included $150 million 3 7/8% notes due 2023 that priced at 99.818 to yield 3.897%, or Treasuries plus 107 bps.

The notes will be part of the same series as, and will be fungible with, the $750 million aggregate principal amount of 3 7/8% senior notes due 2023 that were issued on Nov. 26.

The deal also included $200 million 5¼% notes due 2043 that priced at 103.849 to yield 5%, or Treasuries plus 122 bps.

The notes will be part of the same series as, and will be fungible with, the $400 million aggregate principal amount of 5¼% senior notes due 2043 that were issued on Nov. 26.

Citigroup was the bookrunner for the Securities and Exchange Commission-registered transaction.

The proceeds will be used for general corporate purposes, including the partial refinancing of outstanding debt.

Femsa is a Monterrey, Mexico-based Coca-Cola bottler.

Marisa Wong contributed to this article.

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