Cnooc, Slovenia price big deals; market solid, liquidity thin; long-dated paper in demand

By Christine Van Dusen

Atlanta, May 2 - China's Cnooc Ltd. and Slovenia priced multibillion dollar deals on Thursday -- alongside a $500 million issue from Turkey's Turkiye Sise ve Cam Fabrikalari AS (Sisecam) - amid particularly robust demand for long-dated paper from emerging markets issuers.

"Market retains a solid footing," a London-based trader said.

Still, liquidity was weak on Thursday.

"A very thin market remains. Plenty of accounts hitting and lifting four to five dealers at once makes for poor liquidity," he said. "The front end is very well bid, and it's tricky replacing inventory. The long end has a very good bid from the rates move. This leaves some value in the five- to seven-year parts of many curves."

The Markit iTraxx SovX CEEME ex-EU index spread on Thursday widened 3 basis points to Treasuries plus 190 bps. The corporate index - seen Wednesday at 228 bps over Treasuries - was unchanged on Thursday.

"The market feels supported, especially in the long end as investors look to add duration," a London-based analyst said.

Indeed, Turkey's long end was up 1/2- to 3/4-point while KazMunaiGaz's long end moved up 1/2-point, she said.

"Very good demand for short-dated paper across the board, still," she said.

The new notes from Bahrain Telecommunications Co. BSC (Batelco) - $650 million 4¼% notes due 2020 that priced at 99.45 - traded Thursday at 100½ bid, 100 5/8 offered following Wednesday's similar levels.

BNP Paribas and Citigroup were the bookrunners for the Regulation S-only deal.

"Steady day for recent Batelco," the London trader said.

In deal-related news, the State Administration of Railways Transport of Ukraine (Ukrzaliznytsia) mandated bookrunners, China Railway Construction Corp. Ltd. set a roadshow, Turkey's Turkiye Finans Katilim Bankasi AS (Finansbank) planned notes and Ukraine-focused UkrLandFarming plc considered tapping an existing issue.

"It's a UK holiday on Monday so we're expecting a quieter Friday," he said.

Cnooc sells notes

China-based oil and gas company Cnooc priced a $4 billion issue of notes due 2016, 2018, 2023 and 2043 in a Securities and Exchange Commission-registered transaction, a market source said.

The deal included $750 million 1 1/8% notes due in 2016 that priced at 99.648 to yield Treasuries plus 95 bps. The notes were talked at the Treasuries plus 110 bps area.

The second tranche totaled $750 million 1¾% notes due in 2018 that priced at 99.539 to yield Treasuries plus 120 bps. The notes were talked at a spread in the 135 bps area.

The third tranche, $2 billion 3% notes due 2023, came to the market at 98.477 to yield Treasuries plus 155 bps, following talk in the 170 bps area.

And the fourth tranche of $500 million 4¼% notes due 2043 priced at 98.515 to yield Treasuries plus 150 bps. Talk was set at a spread in the 160 bps area.

Bank of China, BofA Merrill Lynch, CICC HK Securities, Citigroup, Credit Suisse, Goldman Sachs (Asia), JPMorgan and UBS were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used to repay part of the outstanding borrowings from wholly owned subsidiary Cnooc Canada Holding ULC.

Slovenia prices bonds

Slovenia priced a two-tranche issue of $3.5 billion notes due 2018 and 2023 on Thursday, two days after postponing a similar issue amid a ratings downgrade.

The new deal included $1 billion 4¾% notes due in 2018 that priced at 99.124 to yield 4.95%. The notes were talked at a yield in the 5 1/8% area.

The second tranche, $2.5 billion 5.85% notes due in 2023, priced at 98.884 to yield 6%, following talk in the 6¼% area.

The sovereign had initially planned to offer the 2018 notes at a yield in the 5% area and the 2023 notes in the 6 1/8% area. The deal was delayed as Moody's Investors Service downgraded the sovereign's credit rating to junk.

The proceeds from the deal will be used to repay maturing debt, for budget financing and for the recapitalization of the country's banking sector.

"A huge order book on Slovenia having another go at their five- and 10-year deals," the London trader said.

Sisecam prints notes

Also on Thursday, Turkey-based Sisecam priced a $500 million issue of 4¼% notes due 2020 at 99.265 to yield mid-swaps plus 310 bps, a market source said.

The notes priced tighter than talk, set at the mid-swaps plus 337.5 bps area.

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

Sisecam is an industrial group focused on glass and chemicals production. Istanbul-based lender Turkiye Is Bankasi AS (Isbank) owns a controlling 65% stake.

SECO moves up

Saudi Electricity Co.'s 2043s pushed to a fresh high on Thursday, a trader said. The notes closed at 105.62 bid, 106.12 offered.

That's 15 bps tighter on the month, the analyst said.

"Quite a lot of Dubai's 2023s came out today near the 100.25 bid, 100.35 offered level," he said. "Also saw some selling of the 2043s near the 101.375 mark."

QNB named top bank

Qatar National Bank was in focus on Thursday after the International Monetary Fund named it the strongest bank in the world.

"Certainly, when I look at the region's banks, I look at where their bonds are trading and work back," he said. "As such, Abu Dhabi Commercial Bank's 2018s trading at z-spread plus 141 bps versus QNB's 2020s trading at z-spread plus 172 bps makes no sense to me. But then this market works on supply and demand, and not much else for most of the time."

Ukrzaliznytsia taps agents

Ukraine rail transport agency Ukrzaliznytsia has mandated Barclays, Morgan Stanley and Sberbank as bookrunners for a eurobond that will be marketed during a roadshow, a market source said.

The Rule 144A and Regulation S marketing trip will begin Friday and take place in the United States, Europe and the United Kingdom.

And Turkey-based lender Finansbank has been approved to issue up to $750 million of bonds.

China Railway plans roadshow

China Railway Construction will set out on Monday for a roadshow to market an issue of dollar notes, according to a company filing.

Citigroup, HSBC, Morgan Stanley, Citic Securities, BNP Paribas and ABC International are the bookrunners for the Regulation S deal.

The proceeds will be used for investments in overseas businesses and for general corporate purposes.

UkrLandFarming may tap notes

Ukraine-focused UkrLandFarming is looking at issuing an increase of its existing $275 million 10 7/8% notes due 2018, a market source said.

The original issue priced at par to yield 10 7/8% with Citigroup, Deutsche Bank and Sberbank CIB in a Rule 144A and Regulation S deal.

The company will consider a tap of the issue in the event of a reverse inquiry, the source said.

UkrLandFarming is an integrated agricultural producer based in Nicosia, Cyprus but focused on the Ukraine.

Fidelity Bank gives guidance

Nigeria's Fidelity Bank set initial talk for its $300 million issue of notes due 2018 (/B/B) at a yield in the 7% area.

Citigroup and Deutsche Bank are the bookrunners for the Rule 144A and Regulation S deal.

Transmantaro oversubscribed

The final book for Peru-based power transmission company Consorcio Transmantaro SA's recent $450 million issue of 4 3/8% notes due 2023 was $1.4 billion, a market source said.

About 50% of the orders came from the United States, 30% from Latin America, 15% from Europe and 5% from Asia.

The notes priced at 99.002 to yield 4½%, following talk of 4 5/8%.

Credit Suisse, Deutsche Bank, BBVA and BCP Capital were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to refinance debt.

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