Issuance from Colombia, Borets, Eurasian Development Bank; Fed news tightens spreads

By Christine Van Dusen

Atlanta, Sept. 19 - Emerging markets spreads tightened on Thursday as Treasuries rallied on the unexpected news that the Federal Reserve will not yet cut back on bond buying.

"Just when the party looked to be coming to an end, the punchbowl looked to be empty and the sunlight shone through the windows, down the stairs bounded [Federal Reserve Chairman Ben Bernanke] to fill the punchbowl up once more," a London-based trader said.

The Markit iTraxx SovX CEEME ex-EU index spread on Thursday opened at 197 basis points, 21.5 bps tighter than Wednesday. The Markit iTraxx Crossover index spread - seen Wednesday at 374 bps - tightened to a 356 bps spread on Thursday morning.

Bernanke's decision to delay any tapering struck some market-watchers as a delay of the inevitable.

"I can't help but feel the proverbial can has once again been kicked down the road," a trader said.

But issuers and investors were happy to move forward.

"With the FOMC meeting out of the way, we would expect issuers to approach the market," a London-based analyst said.

Indeed, several issuers priced notes on Thursday, including Russia's Borets International, Colombia and Kazakhstan's Eurasian Development Bank.

Meanwhile, in trading on Thursday, bonds from Turkey moved as much as 20 bps tighter.

"Activity-wise, we are very active and the market is very whippy and choppy, understandably," a trader said.

From the Middle East, long-dated paper was in demand while lower-beta names matched the move in Treasuries.

"After the initial grab-attack, we're starting to see some profit-taking in the Middle East and North Africa," the London trader said.

Colombia sells notes

In its new deal, Colombia priced a $1.6 billion issue of 4% notes due 2024 at 98.595 to yield Treasuries plus 142 bps, a market source said.

The notes were talked at a spread in the 150 bps area.

Deutsche Bank and HSBC were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general budgetary purposes.

Borets, EDB do deals

Russia-based submersibles company Borets on Thursday priced $420 million 7 5/8% notes due 2018 at par with Deutsche Bank, Morgan Stanley and Sberbank in a Rule 144A and Regulation S deal.

And Kazakhstan's Eurasian Development Bank priced $500 million 5% notes due 2020 at 98.31 to yield mid-swaps plus 300 bps.

BNP Paribas, Deutsche Bank, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

BNDES launches bonds

Brazil's Banco Nacional do Desenvolvimento Economico e Social SA (BNDES) launched a $2.5 billion two-tranche issue of notes due in 2016 and 2023 (Baa2/BBB/BBB/), a market source said.

The deal includes $1.25 billion notes due 2016 that launched at Treasuries plus 275 bps.

The second tranche of $1.25 billion notes due 2023 launched at Treasuries plus 300 bps.

Deutsche Bank, Itau BBA and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to finance the company's lending program.

BNDES is an economic and social development bank based in Rio de Janeiro.

Bahrain, Dubai see support

Bonds from Bahrain and Dubai saw good support in trading on Thursday, with two-way activity for the sovereign and for Emirates Islamic Bank's perpetual notes.

"Abu Dhabi National Energy Co.'s 2023 is very squeezed, looks rich there," a trader said. "Ongoing steepening on the Dubai Electricity and Water Authority curve. Moving from the 2015s and 2016s to the 2018s and 2020s looks appealing."

Sellers were reported for Emirates airlines while two-way activity was noted for Abu Dhabi Commercial Bank's 2023s.

Middle East in focus

Emaar Properties and Jafza Holdings experienced demand on Thursday, the London trader said.

"The door is now open for supply," he said.

Indeed, two Middle Eastern issuers took steps toward bringing new deals.

Saudi Arabia-based chemicals and metals manufacturer Saudi Basic Industries Corp. (Sabic) has mandated four leads for a roadshow to market a dollar-denominated issue of notes with Citigroup, HSBC, Mizuho Securities and RBS in a Regulation S deal.

The roadshow will be held from Sept. 22 to 25 in Europe, the Middle East and Asia.

"A rare foray into the capital markets for Sabic," a trader said.

Al Hilal sets roadshow

Abu Dhabi-based Al Hilal Bank will set out on Sept. 23 for a roadshow to market a dollar-denominated issue of benchmark-sized Islamic bonds due in five years, a market source said.

HSBC, Standard Chartered Bank, Citigroup and National Bank of Abu Dhabi are the bookrunners for the Regulation S deal.

The lender is owned by the Abu Dhabi government.

"It's the debut for Al Hilal," a trader said.

Embotelladora marketing bonds

In other deal-related news, Chile's Embotelladora Andina SA will set out on a roadshow from Sept. 23 to 25 for a possible issue of notes, a market source said.

JPMorgan, Itau BBA and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The issuer is a Santiago-based bottler of soft drinks.

Hungarian Bank to hit road

Hungarian Development Bank will embark on a roadshow starting Sept. 23 for a dollar-denominated issue of notes, a market source said.

Citigroup, Deutsche Bank and JPMorgan are the bookrunners for the Rule 144A and Regulation S offering.

Gazprom notes price

On Wednesday, Russian national gas producer OJSC Gazprom priced £500 million 5.338% loan participation notes due 2020 at par to yield 5.338%, according to a company announcement.

Deutsche Bank and JPMorgan were the bookrunners for the Regulation S-only deal, which came to the market at a spread of Gilts plus 315 bps.

The notes were issued by special purpose vehicle Gaz Capital SA.

The proceeds will be used to fund a loan to Gazprom, which will use it for general corporate purposes.

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