Bank of India, Kexim, Gemdale sell notes; Dubai Islamic Bank, Gazprom active in trading

By Christine Van Dusen

Atlanta, March 14 - Bank of India, Export-Import Bank of Korea (Kexim) and China's Gemdale International Holding Ltd. priced notes on Thursday as emerging markets investors focused on recent issues from Dubai Islamic Bank PJSC and OJSC Gazprom amid tighter spreads.

The Markit iTraxx SovX index spread started Thursday at 170 basis points over Treasuries, tighter by 2 bps. The corporate index narrowed more, moving in 10 bps to 209 bps over Treasuries.

"Fairly busy day, all told, and the market is closing on the soft-ish side," a London-based trader said. "I think a combination of recent supply and weaker technicals along with 2.05% on the 10-year Treasury has seen some bids get hit and the market turn defensive."

Dubai Islamic Bank's $1 billion issue of perpetual notes that priced this week at par to yield 6¼% traded Thursday at an "impressive" yield near 6 1/8%, a London-based analyst said.

Dubai Islamic Bank, Emirates NBD Capital, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S sukuk.

"DIB perps became free to trade this morning, opening up initially with some good interest around 100.45 bid, 104.55 offered," a trader said. "More local demand drove bond up to 100.65 before we met with fairly decent selling, which drove the bond all the way back down toward par, closing at par bid, 100.20 offered."

The new two-tranche issue of €1.5 billion notes due in 2020 and 2025 from Russia-based energy company Gazprom was also active in trading on Thursday morning.

The 2020s, which priced at par, traded in the 100.20 area. The 2025s that also priced at par were quoted at 100.10 on Thursday.

"Good follow-on buying from investment-grade accounts," a London-based analyst said.

Sellers were reported for Russia's VTB Bank and OAO Sberbank while the Turkey sovereign curve widened by about 5 bps on Thursday, the analyst said.

ADIB notes suffer

Meanwhile, the recent perpetual notes from Abu Dhabi Islamic Bank "failed to take off on the back" of Dubai-based DIB's deal, the London trader said.

"I saw some good buying near the 105 level in the past 48 hours as accounts compared this name to DIB and thought it looked like a better value and better placed," he said. "While this may be true, some local sellers, I suspect, are booking profits from longs set up near the 103 to 103.50 lows from last month."

The 6 3/8% notes - via Abu Dhabi Islamic Bank, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S-only sukuk - recently priced at par.

They closed at 104.25 bid, 104.75 offered on Thursday.

"I still think further weakness may present a buying opportunity on this bond," he said.

Emirates sees some buying

Small buying was seen for the recent 2023 bond from Emirates airline, which priced at 99.31 and was quoted early Thursday at 99.20 bid, 99.30 offered.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank PJSC, Emirates NBD Capital Ltd. and Standard Chartered Bank were the bookrunners for the Regulation S-only sukuk.

"If you'd waited a day or two after pricing, you'd have been able to pick up bonds nicely below reoffer," a trader said.

Energa, Gemdale print bonds

In its new deal, Poland-based energy company Energa sold €500 million 3¼% seven-year notes at 99.704 to yield 3.298%, or mid-swaps plus 200 bps, a market source said.

The notes were talked at a spread in the 220 bps area.

BofA Merrill Lynch, BNP Paribas and HSBC were the bookrunners for the Regulation S deal.

And China-based property developer Gemdale printed an RMB 2 billion issue of five-year notes par to yield 5 5/8%.

HSBC and Standard Chartered were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance debt.

Bank of India issues notes

In another new deal on Thursday, Bank of India priced $500 million 3 5/8% notes due in September 2018 to yield Treasuries plus 280 bps, a market source said.

The notes priced at the tight end of talk, set at Treasuries plus 280 bps to 285 bps.

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

And Export-Import Bank of Korea gave price guidance in the area of Libor plus 70 bps for a sterling-denominated issue of benchmark-sized notes due in three years.

Deutsche Bank and RBS are the bookrunners for the Regulation S-only deal.

The notes are expected to price on Friday.

MMK plans deal

Russia's OJSC Magnitogorsk Iron and Steel Works (MMK) is planning an issue of dollar-denominated notes, a market source said.

No other details were immediately available on Thursday.

MMK is a steel producer based in Magnitogorsk, Russia.

"The liquidity profile is relatively weak, with $221 million of cash and cash equivalents and $992 million of unused credit facilities versus... $1.7 billion of short-term debt," the London analyst said. "Considering this is the first eurobond issued by MMK for several years, we would expect it to come in at a premium to the recent OAO Severstal deal."

That $600 million issue of notes due 2018 priced at par to yield 4.45% via Citigroup, JPMorgan and Sberbank CIB in a Rule 144A and Regulation S transaction.

Cemex launches

Mexico's Cemex SAB de CV launched a $600 million offering of notes due in 2019 (/B/B+) at 5 7/8%, a market source said.

BofA Merrill Lynch, Citigroup, HSBC and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to refinance existing debt and for general corporate purposes.

The notes are non-callable for three years.

Cemex is a Monterrey, Mexico-based building materials supplier and cement producer.

Calidda taps bookrunners

Peru's Gas Natural de Lima y Callao SA (Calidda) has mandated Citigroup and Santander to lead a roadshow starting March 18 for an offering of dollar notes, a market source said.

The marketing trip will begin in London and then travel to Santiago, Chile; Los Angeles; Boston; and Lima, Peru, before concluding on March 20 in New York and Bogota, Colombia.

A Rule 144A and Regulation S deal is expected to follow.

Calidda is a gas producer based in Lima, Peru.

UkrLandFarming in focus

The London analyst was also keeping an eye on Ukraine-focused agricultural producer UkrLandFarming plc, which is on a roadshow with Citigroup, Deutsche Bank and Sberbank CIB for a benchmark-sized offering of bonds.

The Rule 144A and Regulation S deal is expected to be dollar-denominated and benchmark-sized, with proceeds used to repay outstanding debt and for capital expenditures.

The roadshow began Tuesday in New York and will travel to Boston, Los Angeles and London before concluding on March 18 in London.

"Corporate governance is a concern," she said. "The company has presented an ambitious expansion program, including increasing their land bank by 42% within three years. Liquidity is also a concern."

Arcelik picks leads

Turkey-based household appliances manufacturer Arcelik AS has mandated BofA Merrill Lynch, JPMorgan and RBS for a roadshow to market up to $1 billion in notes, a market source said.

The roadshow will begin on March 18 and travel through Europe and the United States.

A Rule 144A and Regulation S deal is expected to follow.

And Serbia has mandated Barclays, Deutsche Bank and JPMorgan to arrange a non-deal roadshow, a market source said.

Oschadbank draws some orders

The final book for JSC State Savings Bank of Ukraine's (Oschadbank) new $500 million issue of 8 7/8% five-year notes was said to be about $700 million.

"A bit on the low side, but the absence of a US 144A tranche is a reasonable explanation," said Svitlana Rusakova of Dragon Capital.

The notes priced at par to yield 8 7/8%, or mid-swaps plus 785 bps, in line with talk.

Credit Suisse, Deutsche Bank and JPMorgan were the bookrunners for the Regulation S deal.

On Thursday the notes were trading at 99.75.

Noble oversubscribed

The final book for China-based conglomerate Noble Group Ltd.'s $400 million 3 5/8% notes due March 20, 2018 was more than $2.5 billion from 208 accounts, a market source said.

The notes priced at 99.268 to yield 3.787%, or Treasuries plus 290 bps.

About 75% of the orders came from Asia and 25% from Europe.

Asset managers and fund managers picked up 47%, private banks 22%, banks 15%, insurance 8% and the public 8%.

BofA Merrill Lynch, Citigroup, ING, JPMorgan and Societe Generale were the bookrunners for the Regulation S deal.

The proceeds will be used for refinancing and for general corporate purposes.

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