EM investors await benchmark notes from Qtel; Greece's FAGE revises talk; volumes thin

By Christine Van Dusen

Atlanta, Dec. 11 - Emerging markets investors spent most of a somewhat quiet Tuesday looking ahead to the upcoming dollar-denominated issue of benchmark-sized notes due February 2023 from Doha-based Qatar Telecom QSC (Qtel).

"Pockets of activity, but it felt like many were reading, talking, readying for Qtel," a London-based trader said.

HSBC, Barclays, Mizuho, Mitsubishi, Morgan Stanley and QNB Capital are managing the proposed Rule 144A and Regulation S deal.

"Given the roadshows are finishing up today, I would expect some further clarity on this early tomorrow," he said. "Secondary Qtel felt OK. It doesn't feel like much paper came out, with the credit benefitting from the US Treasury move."

Said another London source, "The order book seems to be going well in Asia."

Tuesday also saw Abu Dhabi's Union National Bank PJSC planning a euro-denominated issue of notes and Greek dairy FAGE International SA revising talk.

Meanwhile, some progress was reported in the United States' fiscal-cliff negotiations.

"The favored deal seems to be one that allows for tax increases for the top tax bracket in return for reductions in the cost of Medicare and eliminating other tax breaks," a London-based analyst said. "Overall tone this morning is better."

Russian corporate names were a few basis points tighter, with demand seen for VTB, Sberbank, Evraz Group, Eurochem and Novatek, she said.

From the Middle East, buyers emerged for Abu Dhabi National Energy Co. (TAQA) paper as well as for the recent Abu Dhabi Islamic Bank perpetual notes.

Overall, though, spreads didn't move much, with the Markit iTraxx SovX index spread and the corporate index unchanged at the start of the session.

"The EM market started to get into holiday mode, with decreasing issuance and lower secondary volumes," the analyst said.

Demand for TAQA

Taking a closer look at trading from the Middle East, TAQA's two-tranche issue of $2 billion notes due Jan. 12, 2018 and 2023 was in demand on Tuesday, a market source said.

The Rule 144A and Regulation S deal included $750 million 2½% notes due 2018 that priced at 99.483 to yield Treasuries plus 200 bps. Those notes were seen Tuesday at 100.47 bid, 100.67 offered.

The second tranche of $1.25 billion 3 5/8% notes due 2023 priced at 99.404 to yield 210 bps over Treasuries. Those notes traded Tuesday at 100.80 bid, 101 offered.

"The recent TAQA bonds are doing OK still," a trader said. "Some good two-way interest on the long one."

BNP Paribas, Citigroup, HSBC and Standard Chartered were the bookrunners for the deal.

Two-way trading for ADIB

Also from the Gulf region, the ADIB notes were seen Tuesday at 105 to 105¼ with two-way activity, a trader said.

The 6 3/8% notes priced in November at par to yield 6 3/8%.

Abu Dhabi Islamic Bank, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S-only deal.

The final book was $15.5 billion, a market source said.

Middle East in focus

The 2023 notes from Abu Dhabi-based International Petroleum Investment Co. were trading Tuesday with a 102 handle, while the company's 2020s and 2022s were about 10 bps tighter on the week, a trader said.

"We continue to see some 2014 and 2015 paper come out," he said.

Dubai Electricity and Water Authority continued to trade well, with the 2020s hitting a fresh high of 122 bid, he said.

And Tamweel PJSC was better offered, while Saudi Electricity Co. still had some paper floating around, even after the Monday's demand for the company's 2017s, he said.

African sovereigns hold well

Looking to Africa, buyers were sighted for short-dated sovereign paper, a trader said.

"Sovereign bonds are holding very well," he said.

Morocco's new 4¼% 10-year notes that priced at 99.228 were seen Tuesday at 99.12 bid, 99.37 offered before trading at 99.27 bid, 99.47 offered.

The sovereign's 5½% 30-year bonds that priced at 97.464 traded at 97.37 bid, 98.12 offered, then moved to 97½ bid, 98¼ offered.

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

Profit-taking for Lat Am

Bonds from Latin America, particularly those from Venezuela and Petroleos de Venezuela SA (PDVSA), saw some profit-taking on Tuesday, a New York-based trader said.

Argentina's bonds moved higher by about ¼ point to 1 point, he said, and some tightening was noted for some higher-rated credits.

Volumes, meanwhile, were thinner and activity was mostly balanced, he said.

"Fiscal cliff talks, the EU region working through Greece issues and the move higher in equity markets are all driving the market as we push closer to late-December holiday trading," he said.

Ukraine bonds widen

From Ukraine, bonds have been moving wider, said Svitlana Rusakova of Dragon Capital.

The long end of the sovereign curve was spotted about ½ point to ¾ point lower, while the 2017s weakened to 106¾ bid, 107¾ offered, she said.

"Ukraine '22s traded at par," she said. "A few sellers emerged in corporate names, moving prices about ¼ point lower."

Abu Dhabi's UNB plans notes

In deal-related news, Abu Dhabi's Union National Bank is planning a euro-denominated issue of notes, a market source said.

"Their existing bond has been well offered recently," a London-based market source said.

And Greek dairy FAGE International and FAGE USA Dairy Industry Inc. revised talk for a $250 million add-on to its existing 9 7/8% notes due 2020.

The Rule 144A and Regulation S notes were initially talked at 100 to 100.50. Revised talk is 50 cents richer, a market source said.

Citigroup Global Markets is the bookrunner for the deal, the proceeds of which will be used to refinance the existing senior notes due 2015, to refinance other debt facilities, to fund capital expenditures and for general corporate purposes

Pricing is expected Wednesday.

The original $150 million issue priced in January of 2010 at 93.278 to yield 11%.

Paul A. Harris contributed to this article.

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