Abu Dhabi Commercial Bank sells bonds; Ukraine bonds bounce; Turkey, Russia move higher

By Christine Van Dusen

Atlanta, Feb. 24 - Abu Dhabi Commercial Bank PJSC sold notes while Ukraine remained in focus on Monday as the whereabouts of former President Viktor Yanukovich remained unknown and an acting leader was put in place until May's early elections.

"An extraordinary weekend of developments in Ukraine," a London-based analyst said. "Clearly the question now is financial aid and whether Russia will pull their $15 billion package."

Europe and the United States could offer support, she said.

"The market has reacted positively, with the '14s up 2 points, trading around 97 to 98, while the '17s are up 4 points," she said.

Sovereign bonds from Ukraine should continue to rally, said Svitlana Rusakova of Dragon Capital.

"The end of violence, political compromise, prospects for aid - and the market rallied [on Friday]," she said. "Interestingly, the sovereign was well offered for most of the day, so those who wanted to get in definitely had a chance. Quasi-sovereigns, on the other hand, re-priced in an instant, up as much as 6 points in some cases. With the positive weekend news flow, we should see more of the same today."

If things take a turn for the worse in Ukraine and bonds take a hit, other markets are unlikely to suffer in response, according to a report from Barclays.

"The financing situation remains tense and the significant uncertainties continue to justify a cautious view on Ukraine credit," the report said. "[But] contagion to other EM assets is likely to be limited."

EM pace to increase

In fact, the pace of activity should increase for emerging markets bonds this week, the analyst said.

"With half-term now over, we expect a pick-up in trading activity," she said. "Away from Ukraine, EM will likely be affected by political developments in Venezuela and Nigeria as well."

On Monday, sovereign bonds from Turkey and Russia moved higher while corporate paper continued to see buyers, she said.

"In Russia, Alliance Oil is seeing sellers this morning," she said.

Said a trader, "Steady session to start the week, and the last week of February."

Kipco trades higher

In trading from the Middle East, Kuwait Projects Co.'s (Kipco) recent $500 million issue of 4.8% notes due 2019 that priced at par was spotted Monday at 103.12 bid, 104.12 offered, a trader said.

The notes came to the market at a spread of mid-swaps plus 314.4 basis points with BNP Paribas, HSBC and JPMorgan in a Regulation S deal.

The bonds closed Monday at 103¼ bid, 104 offered.

"Saw further demand for all three of Kipco's bonds again today," he said. "Burgan Bank is still popular in the mid-114s."

Dubai corporate ticks up

Dubai Investments Park Development Co.'s $300 million 4.291% Islamic bonds due 2019 that priced at par closed on Monday at 100¾ bid, 101 offered, a trader said.

The notes came to the market at a spread of mid-swaps plus 265 bps with Al Hilal Bank, Citigroup, Dubai Islamic Bank and Emirates NBD in a Regulation S deal.

"That's being dragged along by solid bids for Jafza Holdings, DPWorld and Emaar Properties," he said.

Emirates moves down

The 3 7/8% notes due 2023 from Dubai's Emirates airline traded Monday at 97.12 bid, 98.12 offered, a trader said.

The notes priced at 99.331 to yield 4.024%, or mid-swaps plus 300 bps.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank PJSC, Emirates NBD Capital Ltd. and Standard Chartered Bank were the bookrunners for the Regulation S-only sukuk.

ADCB prices notes

In its new deal, Abu Dhabi Commercial Bank sold $750 million 3% notes due 2019 at 99.765 to yield mid-swaps pus 140 bps, a syndicate source said.

The notes priced at the tight end of talk, set 140 bps to 145 bps.

BofA Merrill Lynch, Barclays, ING and JPMorgan are the bookrunners for the Regulation S deal.

"The all-in yield will be circa 3.05% and should be fine there, given the demand I've seen so far this year for senior [Gulf region] bank paper," a trader said before the deal came to the market.

G20 message 'positive' for EM

Some market-watchers were talking on Monday about the communique issued by the Group of 20 finance ministers and central bank governors.

The text from the Feb. 22 and 23 meetings in Sydney included a warning that central banks should consider the consequences when making changes to monetary policy.

"Together with unfolding events in Ukraine, this should be positive," according to a report from Erste Group Research.

"A G-20 pledge to deliver growth at two percentage points above the current forecasted trajectory has left equity markets cold, which probably indicates that our markets will find it difficult to continue Friday's rally," the report said.

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