Issuance from KT Corp., TA Corp.; Middle East tightens; Lat-Am unchanged; Russia weakens

By Christine Van Dusen

Atlanta, April 14 - South Korea's KT Corp. and Singapore's TA Corp. Ltd. sold notes on Monday as investors kept a wary eye on the growing tensions in Ukraine and Russia.

"Events over the weekend in Ukraine have once again increased the chances of sanctions by the West as pro-Russian gunmen continue to hold government buildings in Eastern Ukraine, despite an ultimatum by the Ukrainian government," a London-based analyst said. "Russia has condemned Ukraine's plans to attack the occupiers, while American officials have accused Russia of plotting the activities in the first place."

This, plus increasingly violent clashes, led to the selling of Russian paper on Monday morning, she said.

The sovereign's 2030s were down 1 1/8 points while credit default swap spreads were 16 basis points wider. Quasi-sovereign banks from Russia also widened.

"Russian Agricultural Bank bonds are anywhere from 10 bps to 15 bps wider, although trading flows have been very limited," she said. "Corporates are also being hit, down 1 point to 1½ points on average."

VimpelCom Holdings BV was among the worst performers in that sector, she said.

"Turkey is likewise opening with a defensive tone," she said.

Looking to the Middle East, most paper tightened, though Dubai-based Damac Real Estate Development Ltd.'s recent issue of $650 million 4.97% notes due 2019 suffered, a London-based trader said.

The notes came to the market in late March at par to yield 4.97% via Barclays, Citigroup and Deutsche Bank in a Regulation S deal.

"Continues to trade poorly," he said. "Loose bonds around, still, and pushing out to 375 bps over where many initially thought it should have come."

And bonds from Latin America were mostly quiet on Monday, with low levels of activity and mixed spreads, a New York-based trader said.

Names like Venezuela and Argentina ended the session nearly unchanged as account activity was sell-side driven, he said.

Middle East in focus

Saudi Electricity Co. was better-bid, closing 2 bps to 4 bps better, the London trader said.

"Bahrain sovereign paper sees the 2022s and 2023s better offered and the 2018s and 2020s well supported," he said. "Perpetuals were better offered throughout the session."

"Dubai Islamic Bank's are now a point off the squeezed high," he said.

Abu Dhabi names keep gains

Abu Dhabi Islamic Bank's perpetuals were back near 104 as most bonds from Abu Dhabi managed to hold on to recent monthly gains, the trader said.

"Still a slew of bonds maturing from this part of the region, and that cash will have to be deployed somewhere," he said. "I hope supply from this part of the world doesn't arrive like London buses - right on top of each other - a month before summer and Ramadan."

KT prices notes

In its new deal, South Korea-based telecommunications company KT priced a two-part issue of $1 billion notes due 2017 and 2019 in a Regulation S deal, a market source said.

The $650 million 1¾% notes due in 2017 priced at 99.791 to yield Treasuries plus 100 bps, following talk in the 105 bps area.

The $350 million 2 5/8% notes due 2019 priced at 99.642 to yield Treasuries plus 110 bps, following talk in the 115 bps area.

BofA Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

TA does deal

Singapore-based property developer TA priced S$75 million 5¼% notes due 2016 at par to yield 5¼%, a market source said.

HSBC and United Overseas Bank were the bookrunners for the Regulation S deal.

Market sources also were whispering about a possible issue of notes from Croatia.

Bank of East Asia talks

Also on Monday Bank of East Asia set final talk in the Treasuries plus 170-bps area for its dollar-denominated issue of benchmark-sized notes due in three years, a market source said.

Citigroup, CLSA, HSBC and Goldman Sachs Asia are the bookrunners for the Regulation S deal, which could price as soon as Monday.

The proceeds will be used for general corporate purposes.

The bank is based in Hong Kong.

Azure Orbit on marketing trip

Azure Orbit II International Finance Ltd. set out on Monday for a roadshow to market a dollar-denominated issue of notes, a market source said.

Bank of Communications, UBS and Standard Chartered Bank are the global coordinators. Bank of Communications, BOCOM International, ANZ, HSBC, Standard Chartered Bank and UBS are the joint bookrunners and lead managers.

A Regulation S deal is expected to follow the roadshow.

Poly sets roadshow

China's Poly Real Estate Group Co. Ltd. will set out on a roadshow to market a dollar-denominated issue of notes, a market source said.

Citic Securities and HSBC are the bookrunners for the deal.

The notes will be issued by Poly Real Estate Finance Ltd., a special-purpose vehicle owned by Hengli (Hong Kong) Real Estate Ltd., which is the primary offshore subsidiary for Poly Real Estate Group.

No other details were immediately available on Monday.

The Guangzhou-based issuer develops and sells residential homes and manages and leases properties.

Final book for Zenith

In other news, Nigeria-based Zenith Bank's recent $500 million issue of 6¼% notes due 2019 was two-times oversubscribed, a market source said.

The notes priced at par to yield 6½%, or Treasuries plus 485 bps, with Citigroup and Goldman Sachs in a Rule 144A and Regulation S deal.

The proceeds will be used to finance project loans.

The final book for the deal was $1.3 billion, with 44% of the orders going to the United States, 35% to the United Kingdom, 9% to Europe, 6% to Nigeria and 6% to others.

Fund managers picked up 74%, banks and private banks 15%, hedge funds 9% and insurers and pension funds 2%.

BBVA Chile draws orders

BBVA Chile's new CHF 150 million 1 3/8% notes due 2017 attracted CHF 300 million from 100 accounts, a market source said.

The notes priced at 100.102 to yield 1.34%, or mid-swaps plus 120 bps with Credit Suisse and Deutsche Bank.

Private banks accounted for 46%, asset managers 20%, insurers 20%, bank treasuries 9% and pension funds 5%.

Sura oversubscribed

The final book for Colombia-based Sura Asset Management's recent $500 million 4 7/8% notes due 2024 was $4.3 billion from 293 orders, a market source said.

The notes came to the market last week at 99.57 to yield 4.93%, or Treasuries plus 230 bps with BofA Merrill Lynch in a Rule 144A and Regulation S deal.

Sura is a pension fund administrator in Latin America, with main operations in Chile, Mexico, Peru and Colombia.

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