LDK Solar, Megaworld sell notes on quiet day; Bonsucesso, Zhongsheng ahead; trading mixed

By Christine Van Dusen

Atlanta, April 11 - China's LDK Solar Co. Ltd. sold notes on a Monday that saw a slight uptick in risk aversion amid continued buying but slower issuance from emerging markets.

"EM assets are opening the week with a very modest negative tone," according to a report from RBC Capital Markets. "A moderate risk-off tone dominated global financial markets, including EM."

The JPMorgan Emerging Markets Bond Index Plus spread was at Treasuries plus 245 basis points on Monday morning, a hint wider from Friday's level of Treasuries plus 244 bps, before closing at Treasuries plus 246 bps. Argentina underperformed, at about 5 bps tighter.

"May is traditionally a testing month, and it's just around the corner now," a London-based trader said. "Plus, there're a slew of public holidays coming up."

Said a New York-based market source: "It seems like the market is in consolidation mode. The global macro fears have been put aside over the last couple of weeks, and now guys have their buying shoes on."

LDK prices tap

In its new deal, China's LDK Solar priced a RMB 500 million add-on to its 10% notes due Feb. 28, 2014 via Morgan Stanley in a Regulation S-only deal.

Proceeds from the dollar-settled notes will be used for general corporate purposes.

The original issue totaled RMB 1.2 billion and priced at par on Feb. 18.

This followed the late-Friday pricing of Philippines-based real estate company Megaworld Corp.'s $200 million 6¾% notes due April 15, 2018. The notes came to market at 99.315 to yield 6 7/8%, in line with talk, which was set at the 6 7/8% area.

UBS was the bookrunner for the Regulation S transaction.

Proceeds will be used for refinancing, capital expenditures, working capital and general corporate purposes.

"Issuance has been pretty strong as of late," the New York-based market source said. "The results have been mixed. It's been slightly to the positive, but clients are more selective. Not everything is going straight up. Everyone is trying to get it in this week because next week will be slow overall, with it being Holy Week."

Bonsucesso plans notes

Monday also saw Brazil-based lender Banco Bonsucesso SA set the tenor for its planned issue of senior notes at five years, a market source said.

JPMorgan and Santander are the bookrunners for the Rule 144A and Regulation S deal, which includes a change-of-control put at 101% with a ratings downgrade.

Proceeds will be used to increase lending operations and for general corporate purposes.

The notes, which were marketed on a roadshow from April 5 to April 8, are expected to price this week.

And China-based auto dealership company Zhongsheng Group Holdings Ltd. is planning a Regulation S-registered issue of notes, according to a company filing.

Proceeds will be used for general corporate and working capital purposes, as well as for expanding the company's distribution network of dealerships through growth and acquisitions, alliances, joint ventures and other strategic investments.

Turkey sees selling

In trading, Turkey experienced some selling on Monday, even after the sovereign's current account deficit for February grew less than expected.

"The sovereign curve is about 1 to 2 basis points wider," a London-based trader said.

The news also encouraged some selling of Akbank's 2018s, but for the most part corporate issuers stayed firm.

"While we remain very constructive on the Turkish banking sector, we believe it will be hard to see spreads perform until the number of new issues in the pipeline clear," he said.

He was pointing, in particular, to the planned benchmark-sized issue of notes planned by Turkey's Turkiye Garanti Bankasi AS (GarantiBank). The Rule 144A and Regulation S offering is on a roadshow this week with bookrunners Deutsche Bank, Goldman Sachs, JPMorgan and Standard Chartered Bank.

"With Garanti roadshowing this week, the banking sector there remains in focus," another market source said. "I'm expecting an aggressively priced seven-year deal."

Middle East in focus

Looking to the Middle East, Qatar was quiet but firm while Abu Dhabi was a mixed bag, Lebanon was steady and better selling was seen for Doha Bank.

"Positive news flow from Dubai is still coming, now with DP World raised to investment grade by Moody's," a source said. "That's tightened their curve 10 to 15 bps."

DP World's 2017s closed on Monday at 101 bid, 101.37 offered, about 40 bps tighter on the week.

"That's still one of my favorite bonds," the London trader said.

Most other paper out of Dubai was unchanged on Monday, he said. "The next leg to go should be people selling the 2014s and 2015s and taking out cash and moving it into the 20s," he said. "I didn't think I'd be saying that earlier in the year, but such has been the move in Dubai names that this trade looks a little interesting."

IPIC holds gains

Also on Monday, paper from International Petroleum Investment Co. held on to its 25 bps weekly gains, the London trader said. And Riyadh's Dar Al-Arkan Real Estate Development Co.'s 2015 notes traded at 99.50 bid, 100 offered.

Egypt, meanwhile, "felt a little bit softer, with the five-year credit default swap spread at 320 [bps] bid, 330 [bps] offered," he said.

Elsewhere in Africa, Ivory Coast had a choppy day - with its 2032 dollar notes seen at 51 bid, 54.50 offered - on the news that deposed leader Laurent Gbagbo had been captured and was in the custody of elected leader Alassane Ouattara.

"Nigeria's 2021 dollar notes are still well supported, and Gabon and Ghana feel a little tired here, with the bonds unchanged, price-wise," the trader said.

He also noted some small buying for Tunisia paper, with the 2013 euro notes closing at 104 bid, 104.50 offered, about 45 bps tighter on the week.

Quiet start for Georgia

The recent $500 million issue of 6 7/8% notes due 2021 from Georgia - which priced Thursday at 98.233 to yield 7 1/8% - was seen at 99.90 bid, 100.30 offered on Monday morning after trading at par late last week.

"It's a quiet start to the week," the London trader said.

And Kazakhstan was firm on Monday morning.

"The real action seems to be in Asia," a market source said.

He noted that many investors were skeptical of the recent deals from China's property sector, including the $750 million notes due 2016 that Longfor Properties Co. Ltd. priced on March 31 at par to yield 9½%.

"But Longfor's new dollar five-year has snapped 75 bps tighter," he said.

The New York-based market source was keeping his eye on another deal from Asia: the $700 million 5¼% notes due 2021 that priced last week from South Korea's Pohang Iron and Steel Co. (Posco).

The notes - via Barclays Capital, BNP Paribas, Deutsche Bank and Goldman Sachs - came to market at 99.593 to yield 5.303%, or Treasuries plus 175 bps, in a Rule 144A and Regulation S deal.

"Posco is trading a little heavy," he said. "It priced fairly but I guess there's been a lot of issuance out there."

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