Russian Agricultural Bank, KWG, Halkbank, JBS, Hana Bank sell notes; EM spreads widen

By Christine Van Dusen

Atlanta, Jan. 29 - OJSC Russian Agricultural Bank, China's KWG Property Holding Ltd., Turkey's Turkiye Halk Bankasi (Halkbank), Brazil's JBS SA and South Korea's Hana Bank issued notes on a busy Tuesday that saw more sellers than buyers of emerging markets assets.

"Interesting market, because some are still topping up allocations and using this dip to add," a London-based trader said. "Others, especially on the lower-beta side, have been spooked and are locking in spread gains."

Flows were busy, he said.

"Generally the spreads are pushing wider, however they're holding on to decent monthly gains," he said.

The Markit iTraxx SovX index spread started Tuesday's session at Treasuries plus 166 basis points, wider by 4 bps. The corporate index moved out 3 bps.

"Overall, the market feels under pressure this morning," a London-based analyst said. "The Middle East, North Africa and Turkey are opening heavier."

Most of the trading activity continued to focus on the recent $1.25 billion issue of notes due in 10 and 30 years from Dubai.

The $750 million tranche of 3 7/8% 10-year Islamic bonds priced at par to yield 3 7/8%. The bookrunners were Dubai Islamic Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank.

The second tranche, $500 million 5¼% conventional notes, priced at 98.148 to yield 5 3/8%. Emirates NDB Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank managed that transaction.

"Dubai printing their 10-year and 30-year deals has been the high watermark for that space in spreads," the London trader said. "The new 2023s are now offered at 4%, having printed at 3 7/8%, and the long ones are now at 98 bid, 98 5/8 offered."

The 2023s closed at 98.62 bid, 99 offered while the 2043s ended the day at 98 bid, 98½ offered.

TAQA trades up

Also from the Middle East, the high print for Abu Dhabi National Energy Co.'s (TAQA) 2023 notes was 103.875, a trader said. The $1.25 billion issue of 3 5/8% notes due 2023 priced in November at 99.404.

The deal also included $750 million 2½% notes due 2018 that priced at 99.483 to yield Treasuries plus 200 bps.

Those notes were seen Tuesday at 100¼ bid, 101 offered.

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

ADIB moves higher

The recent $1 billion issue of perpetual Islamic notes that Abu Dhabi Islamic Bank priced at par to yield 6 3/8% traded Tuesday between 105 1/8 and 105 3/8, a trader said.

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

"Slightly better sellers around, especially from private banks," he said.

From Africa, notes from Zambia performed fairly well in trading on Tuesday, a trader said.

"Egypt is better offered again," he said. "South Africa continues to be leaned on; the bonds and currency are having a very poor start to the year."

Ukraine gets billed

In other trading, sovereign bonds from Ukraine have been moving wider on the news that Russia's Gazprom has billed the sovereign $7 billion for gas it failed to purchase in 2012.

But Ukraine's 2022s were resilient, trading up at 103¼ bid, 104¼ offered, said Svitlana Rusakova of Dragon Capital.

Still, bonds from Naftogaz took a small hit, trading down at 103 bid, 104 offered.

"Lower-yield corporates traded a bit heavy," she said. "High-yield bonds remained in demand."

Russian lender does deal

In its new deal, Moscow-based Russian Agricultural Bank, through issuer RSHB Capital SA, priced a RUB 10 billion issue of 7 7/8% notes due Feb. 7, 2018 at par to yield 7 7/8%, according to a company notice.

JPMorgan, Citigroup, VTB and Deutsche Bank were the bookrunners for the Regulation S-only deal.

And China Railway Group priced a $500 million issue of 3.85% notes due Feb. 5, 2023 at 99.786 to yield 3.85%, or Treasuries plus 190 bps.

Bank of China International, Standard Chartered Bank, Barclays, Deutsche Bank, HSBC and UBS were the bookrunners for the Rule 144A and Regulation S deal.

In May the Beijing-based construction group announced plans to issue corporate and offshore bonds.

The proceeds will be used as working capital for offshore investment projects and offshore large-scale construction projects.

Hana Bank prices notes

Also on Tuesday, South Korea's Hana Bank sold $500 million 1 3/8% notes due Feb. 5, 2017 at 99.722 to yield Treasuries plus 105 bps.

Barclays, Bank of America Merrill Lynch, Credit Agricole, HSBC and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

And China's KWG priced $300 million 8 5/8% notes due Feb. 5, 2020 at par to yield 8 5/8%, a market source said.

Citigroup, Goldman Sachs, HSBC, ICBC, Standard Chartered Bank and UBS were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance debt and finance existing and new projects.

The company recently canceled plans for an issue of dollar-denominated perpetual notes in favor of the 2020 bonds.

Halkbank sells bonds

In another new deal, Turkey's Halkbank printed a $750 million issue of 3 7/8% notes due in 2020 at 98.901 to yield 4.04%, or mid-swaps plus 255 bps, tighter than talk.

Commerzbank, Goldman Sachs, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

"Halkbank remains one of our top picks, with its sound fundamentals and proven track record of performance," the London analyst said.

The company's existing 2017s are trading at about 100 bps over the sovereign, as compared to Turkiye Vakiflar Bankasi TAO's (Vakifbank) 2017s that trade at about 95 bps over the sovereign.

"The two are fairly similar in terms of business model and franchise and are similarly rated," she said.

New issue from JBS

On Tuesday Brazil-based meat processor JBS sold $500 million 6¼% notes due Feb. 5, 2023 at 98.183 to yield 6½%, a market source said.

The notes were talked at a yield of 6¾%.

BB Securities, Bradesco BBI, Deutsche Bank, JPMorgan and Santander were the bookrunners for the Rule 144A and Regulation S deal.

In other deal-related news, Hong Kong's DBA Telecommunications (Asia) Holdings Ltd. has decided not to move forward with a planned dollar-denominated issue of five-year notes due to market conditions, a market source said.

BNP Paribas and Deutsche Bank were the bookrunners for the Regulation S deal, which was talked at the 12% area.

The proceeds were to be used to expand the company's intelligent self services business and for working capital and general corporate purposes.

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