New Ziraat Bank notes trade up; Bancolombia, Hungary set roadshows; Saudi Arabia on tap

By Rebecca Melvin

New York, Sept. 26 – Turkiye Cumhuriyeti Ziraat Bankasi AS’ newly priced 5 1/8% notes traded up to 100.5 on Tuesday after the Turkish bank priced $500 million of the six-year notes at par.

The Ziraat Bank bonds were driven up by a general recovery in emerging market risk following a weaker tone on Monday, MUFG Securities credit strategist Trieu Pham told Prospect News.

Emerging markets had been weighed down along with other markets by fears over talk of war between North Korea and the United States. Those fears seemed to abate on Tuesday with U.S. Treasuries slipping back and stocks reasserting themselves.

Geopolitical concerns remain in the forefront of market tone however. In addition to the Korean peninsula, investors were expected to watch the results of the Kurdish independence referendum, which should be announced within the next several days, and potential fallout there in the region. However, the Kurdish government has said the vote will not to spur immediate separation plans but beginning of talks.

Elsewhere on Tuesday, Hungary was set to start a roadshow in Europe for a benchmark offering of euro-denominated 10-year notes, according to a market source.

BNP Paribas, Citigroup, Deutsche Bank and ING were arranging the meetings for the Regulation S offering beginning on Wednesday.

Hungary is also holding a capped tender offer for dollar-denominated notes, which is set to expire Oct. 3.

In Latin America, Bancolombia SA was also starting a roadshow for up to $1 billion of 10-year subordinated tier 2 notes.

Investor meetings were scheduled through Oct. 10 for Bogota, Los Angeles, Boston, Zurich, Geneva, Lima and Santiago.

The registered Bancolombia deal is being sold via joint bookrunners BofA Merrill Lynch, Citigroup and UBS Securities, with Valores Banistmo acting as co-manager.

Proceeds will be used to acquire a portion of the Medellin, Colombia-based lender’s 6 1/8% notes due 2020 and 5 1/8% notes due 2022, issued on July 26, 2010 and Sept. 4, 2012, respectively. Any remaining proceeds to be used for general corporate purposes.

Price talk emerged on Saudi Arabia’s planned dollar-denominated notes.

The 2023 tranche was being talked at a yield spread in the U.S. Treasuries plus 130 basis points area. The 2028 tranche was being talked at a yield spread of U.S. Treasuries plus 165 bps area, and the 2047 tranche of notes was being talked at a spread in the Treasuries plus 200 bps area.

The notes are being sold under the kingdom’s global medium-term note program via Goldman Sachs, GIB Capital, HSBC, JPMorgan and MUFG as joint lead managers and joint bookrunners.

New Ziraat Bank trades up

Ziraat distributes Turkish government subsidized agricultural loans and is Turkey’s leading bank in terms of total assets, total deposits and return on equity as of the first half of 2017.

The new Ziraat 5 1/8% notes priced at a spread of mid-swaps plus 314.1 bps, at the tight end of talk, and the new paper represents the bank’s longest-dated offering to date.

Despite an unfavorable secondary market on Monday with Ziraat’s existing bonds widening by 10 bps to 15 bps, the bank was able to tighten talk on the deal by 3/8%.

Final guidance was 5 1/8% to 5¼%, which was revised during marketing to 5¼% to 5 3/8% from 5 3/8% to 5½% initially.

The Rule 144A and Regulation S notes were sold via bookrunners Societe Generale CIB, Goldman Sachs International, Standard Chartered, SMBC Nikko Bank and UniCredit Bank.

The order book was for more than $1.6 billion.

The notes have a change-of-control put if Turkey ceases to control more than 50% of the ordinary shares of the bank.

The pricing landing represents a very slight new issue premium compared to fair value at the market open.

© 2015 Prospect News.
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