Victor Soar, ICE print notes as better news from Europe buoys emerging markets assets

By Christine Van Dusen

Atlanta, Nov. 3 - Hong Kong's Victor Soar Ltd. and Costa Rica's Instituto Costarricense de Electricidad (ICE) sold notes on a Thursday that started out weaker but strengthened on the news that Greece could be withdrawing its plans to put its European Union bailout to a vote. Bolstering the bounce was word that the European Central Bank was cutting its key interest rate.

And the rally wasn't really hurt by whispers about the soon-to-be-released draft of a statement from the Group of 20 that reportedly shows pessimism about the global economic situation and that of Greece.

The Markit iTraxx SovX index spread opened 8 basis points wider.

"Early indications show a partial unwind of yesterday's bounce," a London-based trader said during the European morning.

But by the afternoon, the JPMorgan Emerging Markets Bond Index Plus spread was tighter by 15 bps.

"It's all about what's going on in Europe at the moment, so that's driving positive sentiment," a New York-based emerging markets strategist said. Bonds are up on average about 1/3 of a percent on a return basis."

More buyers than sellers were seen throughout the day, a trader said.

"It's been waves of buying in Russia corporates and quasi-sovereigns as well as go-go corporates elsewhere," he said. "Russia's 2030s are making a play to be the new U.S. Treasuries, trading in good size and very firm."

Overall, EM assets were staging a rally on Thursday.

"We'll have to see what happens at the G20 meeting this weekend. We might be surprised on the downside," the strategist said. "But right now, you could definitely call it a rally. Last week's rally is extending itself outside of a small dip earlier on."

Ukraine, BTA Bank suffer

On Thursday morning, Russia-based Vimpelcom's 2022s were 30 bps wider and the International Petroleum Investment Co. curve was 10 bps wider.

"That should set the range for everything else," he said.

Ukraine remained the day's biggest loser, a trader said. The sovereign's bonds started the day 30 bps off the tights of Wednesday after reports of a delay in resumption of payments under the sovereign's current program.

And Kazakhstan's BTA Bank suffered while most of the rest of the Kazakhstan banking sector stayed unusually firm.

UNB starts slow

In other trading, the recent $400 million issue of 3 7/8% notes due 2016 from Abu Dhabi-based Union National Bank PJSC saw very little activity early on Thursday, a trader said.

The notes priced on Wednesday at 99.05 to yield 4.087% via Citigroup, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S deal.

"The new UNB has traded down a half-point," a trader said.

But by the afternoon, the notes seemed to be well supported.

Meanwhile, notes from other names in Abu Dhabi were firm while the Qatar sovereign was "on fire," a trader said.

Garanti sees demand

Looking to Turkey, the sovereign curve was 5 bps to 7 bps higher on Thursday despite a sharp increase in inflation numbers, a trader said.

"None of the fundamentals work in this market," he said. "Garanti Bankasi AS' and Yapi Kredi's results were out today, both missing estimates. However, the demand for both Garanti's 2017s and 2021s continues."

He was also keeping an eye on the recent $500 million issue of 5 3/8% notes due 2016 notes from Export Credit Bank of Turkey (Turk Eximbank), which priced on Oct. 31 at 99.49 via Barclays Capital, Citigroup, Commerzbank and ING.

"The new Turk Eximbank is also trading really well, getting lifted at 101.25, which is circa 95 bps over the sovereign," he said.

Victor Soar, ICE do deals

In its new deal, Hong Kong's Victor Soar sold RMB 1.3 billion notes due 2014 at par to yield 5¾%, a market source said.

DBS Bank, Citic Bank, Deutsche Bank, JPMorgan, Standard Chartered Bank, UBS and Wing Lung Bank were the bookrunners for the Regulation S deal.

The notes are guaranteed by parent company Tsinlien Group Co. Ltd., a Hong Kong-based investment holding company.

In another new deal on Thursday, Costa Rica-based electricity provider and telecommunications operator ICE priced a $250 million issue of notes due 2021 at par to yield 6.95%, a market source said.

The notes - via Citigroup and Deutsche Bank in a Rule 144A and Regulation S offering - were whispered at the low- to mid-7% area.

National Road gives guidance

Thursday also saw Jamaica's National Road Operating and Constructing Co. Ltd. set price talk for its planned issue of $294.18 million 13-year notes at the 9.4% area, a market source said.

Credit Suisse is the bookrunner for the Rule 144A and Regulation S deal.

The proceeds will be used to retire the company's outstanding 8% notes due 2012.

And Moscow-based OAO Russian Railways Co. is planning a dollar-denominated bond offering of up to $1 billion in 2012, a market source said.

No other details were immediately available on Thursday.

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