Melco Crown prices; royal wedding slows activity; Hana Bank, Indonesia notes in demand

By Christine Van Dusen

Atlanta, April 29 - Hong Kong's Melco Crown Entertainment sold notes on a Friday that saw light volumes and muted activity for emerging markets assets as Londoners took the day off for the royal wedding.

But even amid this slowdown, several recent issues fared well, with investors snatching up bonds from Indonesia and South Korea's Hana Bank.

"With this wedding business, the market is really quiet," a trader said. "Emerging markets activity continues to become more and more London-centered. So with London out today and on Monday for the holiday, we're pretty quiet. But there's still plenty of demand for attractive paper."

In general, though, trading volumes were thin on Friday.

"Volumes have just been down pretty heavily this week. With London being out, that's definitely had an impact," a source said. "Things will probably get back to normal on Tuesday."

Melco Crown prints notes

In its new deal, Hong Kong-based casino and resort developer Melco Crown Entertainment Ltd. sold RMB 2.3 billion notes due 2013 at par to yield 3¾%, a market source said.

The Regulation S notes include a make-whole call after May 9, 2012.

Proceeds will be used to repay debt, for working capital, for general corporate purposes, to fund potential future growth and expansion opportunities, to repay existing debt and to partially pre-fund certain scheduled interest payments.

In general, though, the market was primarily focused on recent new issues, including the $750 million perpetual notes issued Thursday by power plant conglomerate China Resources Power Holdings Co. The notes came to market at par to yield 7¼%, or Treasuries plus 524.3 bps, a market source said.

The coupon will be set at 7¼% for years one to five. For years five to 10, the rate will be fixed at an initial spread over five-year Treasuries. For years 10 and beyond, the rate will be fixed at an initial spread plus 100 bps over five-year Treasuries.

Citigroup, Goldman Sachs and UBS were the bookrunners for the deal.

Inti Energi sells bonds

Also on Thursday night, Indonesia-based integrated energy company PT Indika Inti Energi priced a $115 million issue of notes due May 7, 2018 at par to yield 7%, a market source said.

Citigroup, Goldman Sachs, Standard Chartered and UBS were the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for four years.

The company is expected to follow this deal with up to $185 million in issuance.

In other news from Indonesia, the final book for the new issue of notes from the sovereign totaled $6.9 billion from more than 270 investors. About 49% came from the United States, 29% from Asia and 22% from Europe. Funds took up 70%, banks and central banks 24%, insurers 3% and private banks 3%.

Indonesia notes trade up

Indonesia's $2.5 billion 4 7/8% notes priced April 27 at 98.254 to yield 5.1% via Deutsche Bank, JPMorgan and UBS in a Rule 144A and Regulation S transaction.

"That deal did exceptionally well for a very, very large issue," a Connecticut-based trader said. "Today it's up a full 2 points higher, very close to par and a quarter."

Local investors, it seemed, were underallocated in the primary market, he said.

"So what we've seen is some pretty significant rallies overnight when the locals arrived," he said. "I think most of the bonds went to offshore investors, real-money investors who have generally been underweight. As a result this did very, very well. Investors are generally happy with the Indonesia and Asia growth story."

Hana Bank oversubscribed

Also well received was the new deal from South Korea-based Hana Bank, which on Thursday priced $500 million 4% 5.5-year notes at 99.439 to yield 4.115%, or Treasuries plus 205 bps. The final book was $1.4 billion from 116 investors, a market source said.

Barclays Capital, Citigroup, Hana Daetoo Securities, HSBC and Standard Chartered were the bookrunners for the Rule 144A and Regulation S offering.

About 59% of the orders came from Asia, 34% from the United States and 7% from Europe. Funds accounted for 61%, banks 17%, government institutions 13%, retail 6% and others 3%.

"That deal did very well. Not quite as well as Indonesia but it has closed a half-point to a point higher," the Connecticut trader said.

Galicia in demand

Investors were also drawn to the recent issue of notes from Argentina-based lender Banco de Galicia y Buenos Aires SA, which on Thursday priced $300 million notes due 2018 at par to yield 8¾% via UBS and Deutsche Bank.

The notes are non-callable for three years, and proceeds will be used for general corporate purposes.

"That's done pretty well," a trader said. "That's a full 2 points higher. Considering that Argentina was soft all week, with some of the benchmark bonds down 2 points or so on the president becoming less market-friendly, that deal did extremely well."

The reason: Investors just like Argentine corporate paper, he said.

"Guys are always looking for the diversity of Argentine corporate paper, and that deal looked like it was priced nicely, coming at 8¾%," he said. "It came at pretty attractive levels, so there's plenty of demand."

Elsewhere in Latin America, Brazil's debt spreads were stable on little demand.

"Investors are still in love with the Brazil story," according to a report from RBC Capital Markets. "In our view, much of Brazil's good news is already priced in. Heavy debt issuance by quasi-sovereigns is unlikely to lift sovereign spreads. New Brazilian real-denominated globals are likely to launch soon."

Beijing Enterprises on tap

In other deal-related news, China-based conglomerate Beijing Enterprises Holdings Ltd. mandated Merrill Lynch, HSBC, Morgan Stanley, Credit Suisse and UBS as bookrunners for a benchmark-sized issue of 10- and 30-year dollar-denominated notes, a market source said.

The Rule 144A and Regulation S transaction is expected to launch following a roadshow in Asia, Europe and the United States.

Beijing Enterprises is a Hong Kong-based conglomerate with operations in gas transmission and distribution, water utilities, brewery operations and toll road operations.

Also from China, solar wafer producer LDK Solar Co. Ltd. plans to issue dollar-denominated senior notes in a Rule 144A and Regulation S transaction, according to a company announcement.

Proceeds will be used to repay existing debt with remaining maturities of up to one year.

ENN Energy, Latvia plan deals

In another upcoming deal, China-based gas pipeline operator and manager ENN Energy Holdings Ltd. will set out on a roadshow starting May 2 for an issue of senior notes, according to a company filing.

Citigroup, BOC International, Barclays Capital and RBS are the bookrunners for the Rule 144A and Regulation S notes, which will be marketed in Asia, Europe and the United States.

Proceeds will be used for general corporate purposes, to finance capital expenditures, to refinance the company's 2012 notes, to pay off certain short-term loans and for business expansion and acquisition of new projects.

And Latvia is looking to issue $500 million of notes sometime in May or June, a market source said.

No other details were immediately available on Friday.

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