VimpelCom, BNDES tap primary market; EM assets get support from Greece confidence vote

By Christine Van Dusen

Atlanta, June 22 - Russia's VimpelCom Holdings BV and Brazil's Banco Nacional de Desenvolvimento Economico e Social priced notes on Wednesday as the positive outcome from Greece's late-Tuesday confidence vote kickstarted activity for emerging markets assets and inspired investors to sell to make room for upcoming issues.

On the list of issuers with notes in the works are the Republic of Croatia, Malaysia, Brazil's Banco BTG Pactual SA, Mexico's Cemex SAB de CV and Indian Oil Corp. Ltd.

"The morning's nascent recovery has been met with a wall of selling," a London-based trader said.

But some anxiety remained, given that Greece's proposed austerity package is scheduled for a vote next week. Market-watchers were also concerned about rate hikes in China.

"Uncertainty clearly remains high about what happens next," according to a report from RBC Capital Markets.

In response, the JPMorgan Emerging Markets Bond Index Plus spread widened 5 basis points early Wednesday and then tightened by 4 bps to finish the day nearly flat at Treasuries plus 293 bps.

"We are not seeing full-scale bid-hitting, but it's definitely softer," a trader said. "We seem to have paralysis from analysis."

VimpelCom sells notes

In its new deal, Netherlands-based mobile phone service provider VimpelCom - which focuses its business on Russia - sold $2.2 billion of notes due 2014, 2017 and 2022, a market source said.

The issue included $200 million floating-rate notes due June 29, 2014 - a late addition to the deal - that priced at par to yield Libor plus 400 bps.

The deal also included $500 million 6¼% notes due March 1, 2017 that priced at par. The notes were talked at a yield in the 6¼% area.

The third tranche was $1.5 billion 7½% notes due March 1, 2022 that also priced at par. The notes were talked at the 7 5/8% area.

Barclays Capital, BNP Paribas, Citigroup, ING, HSBC and RBS were the bookrunners for the Rule 144A and Regulation S notes.

BNDES does deal

Wednesday also saw Brazil-based lender BNDES sell CHF 200 million 2¾% notes due Dec. 12, 2016 at 100.124 via Credit Suisse and BNP Paribas.

Also from Brazil, investment bank and wealth manager Banco BTG Pactual mandated BTG Pactual, JPMorgan and Bradesco BBI for a benchmark-sized issue of notes, a market source said.

The Rule 144A and Regulation S transaction will be marketed during a roadshow from Monday to June 29.

Cemex plans bonds

Also from Latin America, Mexico-based building materials supplier and cement producer Cemex is planning a $650 million issue of eight-year notes, a market source said.

Bank of America Merrill Lynch and HSBC are the bookrunners for the Rule 144A and Regulation S notes, which include a change-of-control put at 101% and are non-callable for four years.

Proceeds will be used for general corporate purposes, including the repayment of debt.

Croatia taps bookrunners

Also on Wednesday, Croatia mandated Deutsche Bank, HSBC and Unicredit for a euro-denominated issue of benchmark-sized notes, a market source said.

A roadshow is expected to begin Monday.

And Malaysia is on a marketing trip for a sukuk issue of notes totaling $2 billion and due 2016 and 2021, a market source said.

The roadshow will travel from Kuala Lumpur to Singapore, Hong Kong and the Middle East.

Citigroup, HSBC, CIMB and Malayan Banking are the bookrunners for the deal.

"Sukuk funds have a new deal from Malaysia to sink their teeth into shortly," a trader said. "It's a very solid credit that continues to lead the way in the world of Islamic finance."

Indian Oil picks leads

In other deal-related news, Mumbai-based oil and gas company Indian Oil mandated BNP Paribas, RBS and Citigroup for a $500 million issue of notes, a market source said.

The notes are expected to carry a 10-year tenor.

"It feels to me like a lot of negative news has been priced into the market, and if anything positive comes out, the market should do better and the primary will open up for July," a New York-based market source said. "That's what the market seems to be setting itself up for."

Ukraine down, Turkey firmer

In trading on Wednesday, Ukraine's 2016 dollar notes were down half a point to 99.50, and VimpelCom's 2021 dollar notes were down ¾ of a point to 104.75.

"Asia had a weak session and supply fears weighed on the market," a trader said.

Turkey opened slightly firmer, a trader said.

"Financials are well supported early in the morning," he said. "We are better buyers of Turkiye Garanti Bankasi AS' 2021s and sellers of Yuskel Insaat's 2015s."

Middle East stays strong

Issues from the Middle East and North Africa continued to perform well despite market volatility.

"They're largely immune from all this, with even high-beta names like Dubai trading well," the London trader said.

From Abu Dhabi, issuer Abu Dhabi Islamic Bank's 2015 dollar notes were popular - trading at 101.62 bid, 102.12 offered - after having lagged. And Qatar's 2015 dollar notes were liquid while Qatar Islamic Bank traded up a few times.

"Of course the sukuk market goes out well supported," another trader said. "And special mention to Lebanon, which continues to trade well, especially in the belly where there's not much paper around."

FirstRand better bid

In other trading on Wednesday, South Africa-based FirstRand Bank Ltd.'s 2016s were better bid following the news that the lender is tendering for its 2012 deal at 99.50, or Libor plus 95 bps. The 2016 notes were trading at 99.50 bid, 100.25 offered on Wednesday after pricing at 99.548 on June 2.

Also from Africa, Nigeria's GTB Finance BV and Senegal felt a bit heavy, a trader said.

"However on the flipside we saw good demand and interest on Nigeria's 2021s and Egypt's 2020s and 2040s," he said.

Little selling for LatAm

Less selling was seen for Latin American names, the New York-based market source said.

"There's really a lack of natural selling in the Latin American space," he said. "Latin America is very, very firm. There's just generally better buying and no real selling."

He pointed to Brazil, which was about 10 bps to 15 bps tighter week over week. Mexico was flat to 2 bps or 3 bps tighter, and Colombia was tighter as well.

"There's more selling and pressure in the Asian space," he said. "That's just leaking out, and the sector is losing confidence. It's more choppy and whippy."

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