Lithuania, Bank of China price deals; EM widens amid volatility; funds see $406 million inflows

By Paul A. Harris

St. Louis, Feb. 4 - Stock markets in Europe and the United States slid precipitously on Thursday, and credit widened as European Union central bankers and finance ministers mulled unpalatable interventions in the ailing economy of Greece, sources said, adding that high-yield emerging market paper was put though its paces.

Asian high-grade paper, such as the bonds of Chinese conglomerate Hutchison Whampoa, widened by 5 to 8 basis points during the New York session, according to a trader who focuses on Asian fixed income.

High-yield emerging market paper took a more persuasive hammering, the trader added, noting that volatility in stocks was rendering people skittish with respect to risk.

Indonesia's 11 5/8% global bonds due March 2019 traded as low as par ¾ bid, down from Wednesday's close of 101½ bid, the trader said.

The chop that rocked the capital markets prompted the Bank of India to pull its planned dollar-denominated offering of global bonds.

In the face of Thursday's volatility, however, news surfaced that the most recent week saw cash continuing to pour into the dedicated emerging markets bond funds.

The funds attracted another $406 million, although flows into funds investing in riskier local currency debt fell to around half the total inflows, compared to over 95% the previous week, according to EPFR Global.

Thursday's deals launch

Lithuania priced a $2 billion issue of 7 3/8% 10-year global bonds (Baa1//BBB) at 98.273 to yield 7 5/8%, on Thursday.

Barclays Capital, HSBC and RBS managed the sale.

Elsewhere, Bank of China (Hong Kong) priced a $1.6 billion issue of 5.55% 10-year notes (A1/A-) at a 200 bps spread over Treasuries.

The spread printed on top of the price talk.

The notes came at a reoffer price of 99.591 to yield 5.604%

BOCI Asia, Deutsche Bank and UBS managed the sale.

Soon after pricing, the new 5.55% notes due 2020 widened to 203 bps bid, 208 bps offered from the 200 bps issue spread, according to a trader who added that after the initial trades, volume in the name fell off completely.

Meanwhile, Hong Kong's Noble Group priced a $400 million add-on to its 6¾% global bonds due Jan. 29, 2020 (Baa3/BBB-) at a 265 bps spread to Treasuries.

The add-on came at a reoffer price of 103.40, resulting in a 6.3% yield.

Goldman Sachs & Co. led the deal.

Proceeds will be used to refinance debt.

The original $850 million issue priced at 99.105 to yield 6 7/8% last October.

Before the add-on price, the existing Noble Group 6¾% bonds due January 2020 traded at 102.50.

"The market was weak, and everybody was anticipating more supply," the trader commented, adding that once the add-on priced, trading in the 6¾% paper ceased.

United Gulf starts roadshow

Bahrain's United Gulf Bank BSC (Baa3) began a non-deal roadshow on Wednesday.

Calyon Securities and Standard Chartered Bank are arranging investor meetings in the Middle East, Asia and Europe ahead of a possible dollar-denominated Regulation S offering of global bonds.

The company is 95% owned by Kuwait Projects Co. (KIPCO).

Bank of India postpones

Finally, Bank of India postponed its dollar-denominated offering of senior unsecured notes (Baa2/) due to market conditions on Thursday.

The deal, which was to be priced off the bank's $2 billion medium-term notes program, was to be led by Barclays, Citigroup, Deutsche Bank, HSBC and RBS.

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