Investors seek safety; Alfa Bank, Evraz advance deals; Uniflora Prima, Bonsucesso postpone

By Christine Van Dusen

Atlanta, April 18 - Emerging markets investors sought safer assets on Monday after Standard & Poor's put the United States on negative credit watch, adding to the weaker tone set in motion last week by rumors that Greece would need to restructure its debt.

"The move triggered a fresh bout of risk aversion in a liquidity-impaired market prone to large swings," said Gavan Nolan, an analyst with Markit, in a report.

Another market source concurred. "It's led to the typical flood of risk aversion. Emerging markets cash bonds are all being marked lower."

Also contributing to the day's negative tone: continued concerns about the euro zone and the property development industry in China.

"European Union periphery pressures and Chinese real estate bubble concerns are weighing on the market today," a London-based trader said. "Most of the emerging markets regions are trading softer."

Meanwhile, Russian issuers Alfa Bank and Evraz Group SA whispered guidance for their planned notes while Indonesia's PT Uniflora Prima and Brazil's Banco Bonsucesso SA canceled deals.

Greek spreads widen

Monday looked like a bad day for sovereigns in particular, with Greece's five-year credit default swaps widening 89 basis points while Spain's widened by 16 bps, Portugal's by 15 bps, Italy's by 13 bps and Ireland's by 21 bps.

The JPMorgan Emerging Markets Bond Index Plus spread widened in the morning by 6 bps to Treasuries plus 269 bps.

"Greece's spreads were dramatically wider following a weekend report in Greek newspapers that said the government had discussed a debt restructuring with the 'troika:' the EC, ECB and IMF. Specifically, a maturity extension was discussed," Nolan said. "Denials from the Greek government and the Bank of Greece governor were largely ignored by the market."

Alfa, Evraz whisper notes

In deal-related news, Russia-based private lender Alfa Bank whispered its benchmark-sized issue of notes at the 8% area, a market source said.

Goldman Sachs, UBS and Alfa Bank are the bookrunners for the Rule 144A and Regulation S notes, which are being marketed on a roadshow this week.

This comes against the backdrop of a weaker session for Russian banks. "They're all slightly weaker across the board," a trader said. "Alfa Bank looks pretty good at 20 bps over the Alfa curve, which has widened 20 bps in the last week."

Also from Russia, vertically integrated steel and mining concern Evraz Group whispered its planned issue of up to $1 billion seven-year notes at 6.7% to 7%, a market source said.

Goldman Sachs, ING and VTB Capital are the bookrunners for the Rule 144A and Regulation S notes.

"That looks cheap to the curve," a market source said. "But the whole sector is rich."

Satmex, Bio-Chem plan bonds

Mexico-based satellite service provider Satelites Mexicanos SA de CV (Satmex) is planning a roadshow for its $325 million issue of senior secured notes due 2017, a market source said.

Jeffries is the bookrunner for the Rule 144A and Regulation S notes, which are non-callable for three years.

Proceeds will be used to redeem existing first-lien notes and for other funding needs.

The marketing trip began Monday and will stop in Miami and London before ending on May 3.

Also on Monday, China-based corn-related product manufacturer and seller Global Bio-Chem Technology Group Co. Ltd. announced plans to issue bonds.

HSBC is the bookrunner for the Regulation S notes, the proceeds of which will be used for the repayment of existing debt.

FIP sets guidance

In other deal-related news, Ukraine's state-owned infrastructure funding vehicle, Financing of Infrastructural Projects (FIP), talked its planned issue of $689 million seven-year notes at the 7.4% area, a market source said.

Morgan Stanley and VTB Capital are the bookrunners for the deal.

"That doesn't look that great at only 50 bps over the Ukraine curve for an illiquid bond," a market source said.

This news followed the late-Friday pricing of $260 million 7.975% notes due 2021 from Argentina's Neuquen Province, which came to market at 99.423 to yield 8%, in line with talk.

Barclays Capital and Citigroup were the bookrunners for the Rule 144A and Regulation S notes.

Proceeds will be used for the repayment of debt or to finance infrastructure projects.

Issuers cancel deals

Monday also saw Indonesia-based cocoa producer Uniflora Prima postpone its planned offering of up to $300 million of five-year notes via ING in a Rule 144A and Regulation S deal that was talked in the 13¾% area.

Proceeds were to be used to make-whole Davomas' 2014 and 2011 notes, to tender for Davomas shares, to fund interest reserve accounts and for capital expenditures.

Also canceling a deal was Brazil-based lender Banco Bonsucesso, which had planned to issue dollar-denominated notes due 2016.

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

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

Other details on both deals were not immediately available on Monday.

Garanti sees buying

In trading, better buying was seen for the recent $800 million two-tranche issue of notes due 2016 and 2021 from Turkey's Turkiye Garanti Bankasi AS (GarantiBank).

The deal - which priced April 14 - included $500 million 6¼% notes due 2021 that came to market at 98.086 to yield 6 3/8%. The second tranche totaled $300 million floating-rate notes due 2016 that priced at par to yield Libor plus 250 bps.

"That 10-year deal is setting a new benchmark for EM private banks and seeing good follow-through demand," a market source said.

Deutsche Bank, Goldman Sachs, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

"On Friday afternoon it felt like there was excess supply of Garanti's 21s in the market, but today demand seems to be picking up again," a trader said.

The 2021 notes were seen trading on Monday at 99.50 bid, 100 offered.

The trader was also a better buyer of Turkish companies Yasar Holding AS' 15s and Yuksel Insaat AS' 15s.

Limited selling

Meanwhile, the Turkey sovereign again opened unchanged. "Consumer confidence numbers just came in, and slightly eased in March," a market source said.

In other trading on Monday, Kazakhstan looked to be relatively immune to the sell-off, a trader said.

Looking to Africa, Nigeria's 2021 bonds were seen moving to z-spread plus 300 bps after the sovereign's elections passed by smoothly.

"The rest of the region opened up unchanged from last week's 20 bps underperformance of the U.S. Treasury move," a London-based market source said.

Overall, he said, "client selling has been very limited."

Mubadala a 'good value'

The market's focus in the region remained on Abu Dhabi-based investment vehicle Mubadala Development Co. PJSC's recent $1.5 billion two-tranche issue of notes due 2016 and 2021.

The deal included $750 million 3¾% notes due April 20, 2016, which priced at 98.975 to yield Treasuries plus 180 bps. The other tranche totaled $750 million 5½% notes due April 20, 2021, which came to market at 99.484 to yield Treasuries plus 210 bps.

Barclays Capital, HSBC, National Bank of Abu Dhabi, Societe Generale and Standard Chartered were the bookrunners for the Rule 144A and Regulation S notes.

"The 2021s are looking like a good value versus International Petroleum Investment Co.'s 2020s," a market source said.

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