Lebanon, China Shanshui, Sharjah Islamic Bank price; EM remains resilient amid market woes

By Christine Van Dusen

Atlanta, May 18 - Lebanon, the Czech Republic's CEZ AS, China Shanshui Cement Group Ltd., the United Arab Emirates' SIB Sukuk Co. II Ltd. and Saudi Arabia's Islamic Development Bank - sold notes on a solid Wednesday for emerging market assets, even in the wake of weak data from the United States and continuing concerns about Greece.

"Most asset prices retain a good bid, and street offer-side liquidity remains testing," a London-based trader said. "It's an incredibly resilient and well-sponsored market that feels like it goes tighter everyday."

Among the names most sought after in the secondary market were Kuwait-based Kipco's 2016s and 2020s, which were 15 basis points tighter on the week. Also in demand was the long end of the Qatar sovereign curve and Qatari Diar's 2020s.

"Sukuks feel well bid, and Dubai, Dubai Water and Electricity Authority and Emaar Properties all continue to tick along happily," he said. "However, don't forget this U.S. Treasury move, with the 10-year now at 3.10%. This has wrong-footed a lot of people."

Lebanon prints bonds

In its new deal, Lebanon sold $1 billion notes due 2019 and 2022 with bookrunners Byblos Bank, Fransa Investment and HSBC, a market source said.

The deal included $650 million 6% notes due May 20, 2019 that priced at par. The notes were talked at the 6% area.

The other tranche was a $350 million tap of the sovereign's 6.1% notes due Oct. 4, 2022, which priced at 97.016 to yield 6.475%. Price talk was set at the 6½% area.

The original issue of 2022 notes totaled $225 million and priced at par.

In the morning, the notes are fairly active, with most activity going through on the 2022s between 97.40 and 97.50 and the 2019s between 100.10 and 100.20, a trader said.

By afternoon, the notes started to fade. "There are plenty of 2019s floating around but good local liquidity around 100.15 to 100.20 now. The high print is 100.30."

Said another market source: "The 2019s went to the usual flippers, so they're making slow progress."

China Shanshui prices notes

The primary market on Wednesday also featured the issue of $400 million senior notes from Hong Kong-based cement producer China Shanshui Cement Group.

The notes due May 25, 2016 priced at par to yield 8½%, a market source said.

Barclays Capital, Credit Suisse, Deutsche Bank and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for three years and include a change-of-control put at 101%.

Proceeds will be used to refinance debt, to expand production capacity, for acquisitions and for general corporate purposes.

Sharjah bank sells bonds

Also on Wednesday, the United Arab Emirates' SIB Sukuk Co. II sold $400 million 4.715% sukuk notes due May 27, 2016 at a spread of 270 bps over mid-swaps, a market source said.

"That looks fairly priced," a market source said.

Standard Chartered Bank and HSBC were the bookrunners for the Regulation S notes, which are guaranteed by Sharjah Islamic Bank, a lender based in Sharjah.

"This was initially rumored at 300 bps, however once a deal gets momentum, trades up in the gray and more accounts jump into the book, more people do their credit work and it really can be a vicious cycle," a trader said. "Someone told me the book was as high as $3 billion. The key here is that it's only $400 million and a sukuk, so it should do well."

IDB does deal

In another new sukuk issue, lender Islamic Development Bank sold $750 million 2.35% notes due May 25, 2016 at par to yield mid-swaps plus 35 bps.

"That's less impressive," a market source said.

HSBC, Standard Chartered Bank, BNP Paribas and Deutsche Bank were the bookrunners for the Regulation S notes.

"It's hardly exciting, but this is a AAA-rated credit that is 26% owned by Saudi Arabia," the trader said. "Over time this will get soaked up, as the previous two deals have. There are not many AAA-rated dollar sukuks out there."

CEZ oversubscribed

The primary market also saw Prague-based utility company CEZ sell €500 million 3 5/8% senior notes due May 27, 2016 at 99.475 to yield mid-swaps plus 85 bps, a market source said.

BNP Paribas, Banca IMI, Erste Bank, HSBC and Unicredit were the bookrunners for the transaction.

The order book totaled about €1.4 billion, a source said.

Roadshows for TAM, Celpa

In other deal-related news on Wednesday, Brazil-based airline TAM SA mandated BTG Pactual, Santander and BB Securities for a dollar-denominated benchmark-sized issue of 10-year notes, a market source said.

A roadshow for the notes - which are non-callable for five years - will begin May 20 and is expected to travel through Chile, Europe and the United States.

And Brazilian electricity company Centrais Electricas do Para SA (Celpa) will embark on a roadshow on Thursday for a dollar-denominated issue of notes, a market source said.

Bradesco BBI, HSBC, Itau and Standard Bank are the bookrunners for the Rule 144A and Regulation S deal that will be marketed in Asia, Europe and the United States.

Banco do Brasil plans notes

Also from Latin America, Brazil's Banco do Brasil SA (Cayman Island branch) plans to issue a benchmark-sized issue of dollar-denominated notes due January 2022, a market source said.

BB Securities, Bank of America Merrill Lynch, BNP Paribas, Banco Votorantim and JPMorgan are the bookrunners for the Rule 144A and Regulation S offering, which is expected to price Thursday.

Proceeds will be used for general corporate purposes.

And Mexico-based electricity company Comision Federal de Electricidad whispered its planned $1 billion issue of 10-year notes at the Treasuries plus high-100 bps to 200 bps area, a market source said.

Bank of America Merrill Lynch, Deutsche Bank and Goldman Sachs are the bookrunners for the Rule 144A and Regulation S notes, which are expected to price Thursday.

Russia sets price talk

Wednesday also saw Russia set price talk for a planned tap of its RUB 40 billion 7.85% notes due May 10, 2018 at the 7 1/8% area, a market source said.

Deutsche Bank, HSBC, JPMorgan, Renaissance Capital and VTB Capital are the bookrunners for the Rule 144A and Regulation S deal.

Russian-based OAO VEB-leasing is expected to follow closely on the sovereign's heels, with a dollar-denominated issue of notes via Credit Suisse, Goldman Sachs and VEB Capital. The deal's roadshow concludes Thursday.

And a Rule 144A and Regulation S deal lies ahead for OJSC Russian Agricultural Bank, following a roadshow with bookrunners Barclays Capital, JPMorgan and VTB Capital.

"Despite the new supply," the trader said, "this sector is seeing very good demand."

Banks well supported

Also from Russia, Alfa Bank's 7¾% 2021 notes that priced April 19 at par traded up on Wednesday, seen at 102.60 bid, 102.90 offered.

"We are better buyers of Alfa," the trader said.

Other banks were also well supported, including the 6¼% 2021 notes from Turkiye Garanti Bankasi AS (GarantiBank), which came to the market on April 14 at 98.086. Those notes were seen at 99.05 bid, 99.35 offered on Wednesday.

Lender Finansbank AS' 5½% 2016s were seen trading up at 97.50 bid, 97.95 offered after pricing at 99.384 on May 5.

Wednesday also saw bonds from Belarus firming up about a half-point with strong real-money demand, a London-based market source said.

"We saw good demand for Belarus as people get more comfortable about the bailout," he said. "But bonds still yield Libor plus 850 bps."

GTB trades up

The recent issue of 7½% notes due 2016 from Nigeria's GTB Finance BV - which priced May 12 at 98.981 - was trading Wednesday at 101.37 bid, 101.87 offered.

"The GTB 2016s are still strong," the trader said.

Meanwhile, recent underperformer BTA Bank from Kazakhstan opened firmer on Wednesday after undulating on Tuesday.

"BTA's 2018s had a rollercoaster day yesterday, trading from 96.50 to 99.50 and back, but they are firmer today," he said. "We are buyers."

The notes were later seen at 97.50 bid, 98.25 offered.

Pertamina debt eyed

In other news, the final book for Indonesia-based oil and gas company PT Pertamina Persero's $1 billion issue of 5¼% notes due 2021 was about $7 billion with 330 accounts involved, a market source said.

The notes came to the market at 98.097 to yield 5½% via Citigroup, Credit Suisse and HSBC in a Rule 144A and Regulation S deal.

About 42% of the orders came from the United States, 36% from Asia and 22% from Europe. Fund and asset managers accounted for 70%; insurers, pensions and central banks 12%; banks 11% and private banks 8%.

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