New issue pipeline opens with bonds from Bahrain, Hong Kong, Sharjah; most EM assets weaken

By Christine Van Dusen

Atlanta, Sept. 10 – Bahrain, Hong Kong, the Emirate of Sharjah, Dubai’s Emirates NBD, Chile’s Empresas CMPC SA and Poland sold notes on Wednesday, which – along with the current rate environment – made for a busy trading day for assets from the Middle East.

“Very active couple of days, flow-wise, with very good flows in Dubai and Abu Dhabi,” a London-based trader said. “Even some in the Kuwaiti complex, with two-way on Kuwait Projects Co.”

Bonds from Saudi Arabia were “a little lackluster,” he said, “although Dar al-Arkan Holdings is feeling a little offered.”

In other trading, the new issue of 3 7/8% notes due 2021 from Turkey’s Arcelik AS – which priced this week at 99.25 to yield mid-swaps plus 321 basis points – was spotted a little bit below re-offer, he said.

“But generally holding up reasonably well, given the overall weaker tone,” he said.

BNP Paribas, Citigroup and HSBC were the bookrunners for the Regulation S deal.

All of this came against the backdrop of some stability in Ukraine, where a ceasefire with pro-Russian troops seemed to be holding on Wednesday.

“There is a good chance, assuming no major developments in the coming hours, that the European Union may drop or further delay the proposed sanctions,” the analyst said.

But there is still pressure on the EU to impose more sanctions, he said.

“We understand sanctions have also been prepared in Washington,” he said. “Like Europe, the U.S. has said they will monitor the ceasefire before implementing the sanctions, but they will feel less pressure to drop the sanction than Europe.”

Bonds from Ukraine have traded poorly so far this week, said Svitlana Rusakova of Dragon Capital.

“The market is tired of hints and wants clear signs,” she said.

EM weakens overall

Other bonds from emerging markets were mostly weaker on Wednesday, a London-based analyst said.

“Russia and Turkey credit default swaps are both 3 bps wider this morning, while Central and emerging Europe bids have largely disappeared,” he said.

He pointed to Croatia’s 2021s, which moved down a ½ point.

Bahrain prints bonds

Bahrain priced $1.25 billion 6% notes due Sept. 19, 2044 at par to yield 6%, a syndicate source said.

The notes were initially talked at a yield in the low-6% area.

Citigroup, Gulf International Bank, MUFG and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

“The deal will be free to trade in the morning, so we’re expecting some good activity there,” the London trader said. “We were active in the 2022 dollar notes in the secondary around the z-spread 175 bps level. The bond is best part of 45 tighter on the month and trading well.”

Hong Kong sells sukuk

Hong Kong priced a $1 billion issue of Islamic bonds due in 2019 at par to yield 2.005%, a market source said.

HSBC, Standard Chartered Bank, CIMB and National Bank of Abu Dhabi were the bookrunners for the Rule 144A and Regulation S sukuk.

Sharjah prices notes

Sharjah sold $750 million 3.764% Islamic bonds due Sept. 17, 2024 at par to yield 3.764%, or mid-swaps plus 110 bps, a market source said.

The notes were talked at a spread in the 120 bps area.

HSBC, Kuwait Finance House, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered Bank were the bookrunners for the Regulation S deal.

“Very impressive debut for Sharjah,” a trader said. “The bond closes at 97 bid.”

The issue drew a final order book of about $7.5 billion, he said.

“Active, and performed very well,” he said.

Emirates NBD hits primary

Dubai’s Emirates NBD priced a $500 million issue of 6 3/8% perpetual notes at par to yield 6 3/8%, following talk in the mid-6% area, a market source said.

Morgan Stanley and Standard Chartered Bank were the joint global coordinators, and Citigroup, Commerzbank, Deutsche Bank, Emirates NBD Capital, Morgan Stanley and Standard Chartered Bank were the joint lead managers for the Regulation S deal.

Emirates NBD is a provider of corporate, consumer, treasury and investment banking and asset management services.

“Closes with a few sellers around,” a trader said.

Issue from Chilean corporate

Chile’s Empresas CMPC priced $500 million 4¾% notes due Sept. 15, 2024 at 99.717 to yield 4.786%, a market source said.

JPMorgan, MUFG and Santander were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Empresas CMPC is a Santiago, Chile-based pulp and paper company.

New deal from Poland

Poland printed CHF 500 million 1% notes due Sept. 17, 2021 at 99.765 to yield 1.035%, or mid-swaps plus 50 bps, a market source said.

Deutsche Bank and UBS were the bookrunners for the deal.

Gazprom sets roadshow

Russia’s OJSC Gazprom will set out on Sept. 23 for a roadshow to market a possible issue of eurobonds, a market source said.

Deutsche Bank and Credit Agricole CIB are arranging the marketing trip.

Gazprom is a Moscow-based gas company.

ADCB sells bonds

On Tuesday, Abu Dhabi Commercial Bank PJSC priced a $600 million offering of 2¾% five-year notes at 99.94 to yield a spread of 87.5 bps over mid-swaps, a market source said.

The notes were talked at a spread in the 90 bps area.

Barclays, ING, JPMorgan and Mizuho Securities are the bookrunners for the Regulation S deal.

“The ADCB faded a little in line with rates, and there are a few loose bonds around,” a trader said. “About 100.125 is the high since its launch, 99.80 the low.”

He called the drive-by deal a “pretty solid effort.”

Issuance from Mexichem

Also on Tuesday, Mexico’s Mexichem SAB de CV sold $750 million 5 7/8% notes due Sept. 17, 2044 at 99.15 to yield 5.9%, a market source said.

BBVA, JPMorgan, Morgan Stanley and Santander were the bookrunners for the Rule 144A and Regulation S deal.

Mexichem is a chemical company based in Tlalnepantla, Mexico.

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