Primary sees Jordan, Korea Gas, Sberbank, SriLankan Airlines; trading mixed; Albaraka on deck

By Christine Van Dusen

Atlanta, June 23 – Jordan, Korea Gas Corp., Russia’s OAO Sberbank and SriLankan Airlines Ltd. were among the issuers to sell notes on Monday as the ceasefire in Ukraine gave investor sentiment a boost, though the positivity was dampened by the continuing conflict in Iraq.

“The primary market is active once again this morning,” a London-based analyst said.

Trading was mixed, with sellers outpacing buyers. And liquidity suffered somewhat as a result of the World Cup and ahead of the Ramadan holiday, a London-based trader said.

The 2022 and 2023 bonds from Bahrain received some support while Qtel International’s bonds struggled, given its exposure in Iraq, he said.

“I suspect most of the selling has been attributed to the situation on the ground there,” he said. “The main moves have been on 2023s and 2025s and 2028s, not the short-dated 2016s, 2018s and 2019s.”

The recent issue of 4.564% notes due 2024 from Dubai’s Emaar Malls Group traded in good size at 100.60 bid, 100.65 offered after pricing at par, he said.

“That’s a move wider, yes, but it ain’t carnage,” he said. “Still seeing decent buyers of International Petroleum Investment Co. and a mixed bag on Abu Dhabi National Energy Co.”

In deal-related news, Turkey’s Albaraka Turk Katilim Bankasi AS and Abu Dhabi-based Al Hilal Bank set guidance, and Turkey-based Turkiye Cumhuriyeti Ziraat Bankasy AS (Ziraat Bank) released details on the expected tenor for its deal.

For its new deal, Jordan sold $1 billion of 1.945% notes due June 23, 2019 at par to yield 1.945% via Citigroup and JPMorgan, a market source said.

The proceeds will be used for the sovereign’s economic reform program, in accordance with a loan guarantee agreement supported by the United States Agency for International Development (USAID).

Korea Gas does deal

Korea Gas priced $500 million 3½% notes due July 2, 2026 at 99.699 to yield Treasuries plus 92.5 basis points, a market source said.

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

Korea Gas is a natural gas company based in Seongnam, South Korea.

Sberbank prices notes

Russia-based lender Sberbank sold €1 billion 3.3524% notes due Nov. 15, 2019 at par to yield 3.3524%, or mid-swaps plus 260 bps, a market source said.

The notes were initially talked at a spread in the mid-to-high-200 bps area.

Barclays, BNP Paribas, Deutsche Bank and Sberbank CIB were the bookrunners for the Regulation S deal.

“We see this deal as the first to test the euro-denominated bond market this year for Russian issuers, which if successful would yield further issuance by the sector,” the London-based analyst said.

Issuance from airline

SriLankan Airlines priced $175 million 5.3% notes due June 27, 2019 at par to yield 5.3%, a market source said.

Standard Chartered Bank was the bookrunner for the Regulation S deal.

The proceeds will be used to finance aircraft pre-delivery payments and for general working capital purposes.

Guidance from Albaraka Turk

Turkey’s Albaraka Turk set initial talk in the low-6% area for its five-year issue of dollar-denominated Islamic bonds, a market source said.

The issue size is expected to total $500 million.

BNP Paribas, Emirates NBD, Standard Chartered Bank and QInvest are the bookrunners for the Regulation S deal.

Albaraka Turk is a lender based in Istanbul.

“The bank is pretty solid and, more importantly, is well known and regarded,” a trader said. “Their 2018 is now trading super-well, as the loose bonds have disappeared.”

Talk from Al Hilal

Abu Dhabi-based Al Hilal Bank set initial guidance for its upcoming issue of perpetual Islamic bonds in the 6% area, a market source said.

HSBC, Emirates NBD, Standard Chartered Bank, Citigroup, National Bank of Abu Dhabi and Al Hilal Bank are the bookrunners for the tier 1 offering.

The lender is owned by the Abu Dhabi government.

“The deal is unrated, but generally the bank is well regarded,” a trader said.

Ziraat tenor

Turkey-based Ziraat Bank’s dollar-denominated issue of benchmark-sized notes is expected to carry a tenor of five or 10 years, a market source said.

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

Ziraat is an Ankara, Turkey-based lender.

“If successful, they will continue to build the yield curve over time,” the analyst said.

Orlen oversubscribed

Poland-based oil refiner PKN Orlen’s new €500 million issue of 2½% notes due June 30, 2021 that priced on Friday drew a final order book of €2.5 billion from about 230 accounts, a market source said.

The notes came to the market at 99.135 to yield mid-swaps plus 160 bps with BNP Paribas, HSBC, Mitsubishi UFJ Securities, RBS, Santander GBM and UniCredit in a Regulation S deal.

About 37% of the orders came from Germany and Austria, 24% from the United Kingdom, 14% from Central and emerging Europe, 7% from others, 5% from France, 5% from Switzerland, 4% from Iberia and 4% from Nordics.

Asset and fund managers picked up 77%, banks and private banks 14% and insurers and pension funds 9%.

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