Uranium One issues bonds; solid but limited trading for Isbank; Ukraine continues widening

By Christine Van Dusen

Atlanta, Dec. 6 - Canada-based and emerging markets-focused Uranium One Inc. sold notes to end a week that saw emerging markets bonds tighten by Friday on new inflows and limited new supply.

"After a fairly consistent trend of outflows from EM funds in recent months, the week saw $1.5 billion of inflows driven by hard currency while local currency and blended funds saw outflows," a London-based analyst said.

This was a dramatic jump from the previous week's total of $1.05 billion in outflows, but data tracker EPFR Global cautioned against putting too much stock in the numbers.

"I'd treat it with suspicion, as it includes a shifting of assets within one major fund group into one of their emerging markets bond funds," said Cameron Brandt, senior analyst with EPFR.

In trading on Friday, bonds on the shorter end of the Turkey sovereign curve were strong performers, the analyst said. And Turkish bank bonds moved tighter at the end of the week.

Trading has been solid amid limited investor interest for the new issue of notes from Turkey's Turkiye Is Bankasi AS (Isbank), a trader said.

The lender priced $400 million 7.85% notes due Dec. 10, 2023 at par to yield 7.85% with BNP Paribas, Commerzbank, JPMorgan, Morgan Stanley and Standard Chartered Bank in a Rule 144A and Regulation S deal.

She blamed this limited interest on the time of year.

The notes were up 80 cents from reoffer on Friday.

"Following the announcement of the new issue, the old 2022s were the worst performer, 10 bps wider on the week," she said.

Ukraine wider, Russia mixed

Ukraine remained in focus as protests continued following the sovereign's decision to reject a free trade agreement with the European Union.

"Ukraine sovereign cash was 85 basis points to 130 bps wider on the week," the analyst said. "Russian sovereign spreads held in well from mid-week with strong local buying."

She noted particular demand for the 2019s, 2020 euro notes, 2022s, 2030s and 2043s.

Bonds from Russia's Vnesheconombank were mixed at the end of the week, with the 5 3/8% and 5.45% 2017s moving in about 20 bps, a trader said.

"Longer-dated bonds - the 2022s and 2025s - underperformed," she said.

OAO Gazprom's shorter-dated and euro-denominated paper outperformed while Evraz Group and Vimpelcom fell behind.

"In the oil and gas sector, the preference for shorter-dated paper was the obvious trend," she said.

Limited liquidity

In trading from the Middle East, liquidity and volumes fell by the end of the week, the analyst said.

"The excitement from Dubai's victory in the 2020 Expo has faded, with better sellers across the space in general," she said.

Spreads for Qatar bonds were "generally steady," she said. "Bahrain names were generally popular, with Batelco and sovereign cash circa 5 bps tighter on average."

Bonds from Kuwait were well-bid, she said.

"Perpetuals also traded off during the week," she said.

Uranium One sells notes

In its new deal, Uranium One priced a $300 million issue of 6¼% notes due Dec. 13, 2018 at 98.847 to yield 6½%, a syndicate source said.

The notes were talked at 6¼% to 6 3/8%.

Deutsche Bank, Sberbank and Societe Generale were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repurchase existing convertible debentures and for general corporate purposes.

The issuer has operations in Kazakhstan and South Africa.

Far East final book

China-based Far East Horizon Ltd.'s recent RMB 700 million 5.45% notes due Dec. 11, 2016 that priced at par drew a final order book of about RMB 1.5 billion from 48 accounts, a market source said.

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

About 86% of the orders came from Hong Kong, 9% from Singapore and 5% from others.

Fund managers and insurers picked up 51%, private banks 36% and others 13%.

Far East Horizon is a financial leasing unit of Sinochem Group, which is a Hong Kong-based business conglomerate with interests in agriculture, energy, chemicals, real estate and finance.

Bharti Airtel oversubscribed

The final book for India-based Bharti Airtel Ltd.'s €750 million 4% notes due Dec. 10, 2018 that priced at 99.756 was €3.8 billion, a market source said.

The notes came to the market a yield of 4.055%, or mid-swaps plus 300 bps.

Barclays, BNP Paribas, Deutsche Bank, JPMorgan, Standard Chartered Bank and UBS Investment Bank were the bookrunners for the Regulation S transaction.

About 38% of the 370 orders went to the United Kingdom, 18% to Germany and Austria, 9% to Asia, 9% to France and 7% to the Netherlands. Fund managers accounted for 77% and private banks 9% while sovereigns and insurers picked up 9% and banks took 5%.

The proceeds will be used to repay and refinance existing indebtedness.

Bharti Airtel is a mobile telecommunications company based in New Delhi.

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