Icici Bank, Russia, CFE print bonds as investors embrace risk; LDK Solar postpones notes

By Christine Van Dusen

Atlanta, May 19 - Risk appetite got a boost on Thursday from the initial public offerings from Glencore International AG and LinkedIn - as well as the market's optimistic interpretation of recent statements from the Federal Open Market Committee - leading to tightened spreads and new issuance from India's Icici Bank Ltd., Russia and Mexico's Comision Federal de Electricidad (CFE).

The JPMorgan Emerging Markets Bond Index Plus spread tightened 3 basis points to Treasuries plus 273 bps, with Venezuela tighter by 7 bps and Argentina by 23 bps.

"It's more like the EM of old, where Treasuries sell off and we just ignore it, sending spreads tighter," a London-based trader said.

The FOMC's minutes from its April meeting indicated that the $600 billion bond-buying program will end in June and interest rates will stay low for an extended period of time.

"Despite the FOMC discussing its exit strategy from a loose monetary policy - the first step will be stopping the reinvestment of principal payments of agency securities - markets were encouraged by indications that the Fed was in no hurry to normalize," said Gavan Nolan, an analyst with Markit, in a report.

In deal-related news on Thursday, Russia's OAO VEB-leasing set price talk for its planned issue of dollar notes and Brazil's OGX Petroleo e Gas Participacoes SA readied for a roadshow to market a $2 billion issue of seven-year bonds.

In trading, good support was seen for Russian banks, Kazakhstan's JSC Kazkommertsbank, Nigeria's GTB Finance BV and Belarus while Kazakhstan's BTA Bank faltered.

Icici, CFE sell notes

In its new deal, India-based lender Icici Bank sold $1 billion 4¾% notes due Nov. 25, 2016 at 99.665 to yield 4.82%, or Treasuries plus 295 bps, a market source said.

Citigroup, Deutsche Bank, HSBC and RBS were the bookrunners for the Rule 144A and Regulation S notes.

And Mexico-based electricity company CFE sold $1 billion 4 7/8% notes due May 26, 2021 at 99.212 to yield 4.976%, or Treasuries plus 180 bps.

The notes priced in line with talk, which was set at the high-100 bps to 200 bps over Treasuries area.

Bank of America Merrill Lynch, Goldman Sachs and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S notes, which include a make-whole call at Treasuries plus 30 bps.

Russia prices tap

Also on Thursday, Russia priced a RUB 50 billion add-on to its existing 7.85% notes due March 10, 2018 at 104.515 to yield 7%, a market source said.

The notes were talked at the 7 1/8% area.

Deutsche Bank, HSBC, JPMorgan, Renaissance Capital and VTB Capital were the bookrunners for the Rule 144A and Regulation S notes.

The issue's size now totals RUB 90 billion.

"That's recaptured the mood," the London-based market source said. "When they first launched back in late February, it was priced 40 bps cheap to the ruble swaps, when the ruble was 4% weaker than it is now. And it struggled."

But despite the stronger currency and tighter pricing, the notes were well received, he said.

VEB-leasing sets guidance

Also from Russia, VEB-leasing - a subsidiary of Moscow-based lender VTB Bank - talked its planned issue of dollar-denominated notes at 5¼% to 5½%, a market source said.

Credit Suisse, Goldman Sachs and VEB Capital are the bookrunners for the deal.

"Perhaps VEB-leasing at 5¼% isn't so crazy after all. VEB-leasing is enjoying its own mania, trading up a point in the gray market before even pricing," a market source said.

"Russia, in general, has been exceptionally strong all day. We're seeing no weakness, even as 10-year Treasuries hit 3.24% at one point."

OGX Petroleo plans roadshow

In other deal-related news on Thursday, Brazil-based oil and gas exploration and production company OGX Petroleo e Gas announced plans for a roadshow starting Friday for a $2 billion issue of seven-year senior notes.

The issuer first floated the idea in March for a dollar deal.

Credit Suisse, HSBC, Itau and JPMorgan are the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for three years and are expected to price on May 26.

Proceeds will be used to fund an expected production and development campaign, as well as for general corporate purposes.

Saudi Electricity mulls notes

Also on Thursday, Saudi Arabia-based power generator and distributor Saudi Electricity Co. was mulling an issue of $1 billion to $1.5 billion sukuk notes by the end of this year or early in 2012, a market source said.

And China-based solar wafer producer LDK Solar Co. Ltd. postponed its planned issue of dollar-denominated senior notes due to market conditions, according to a company announcement.

"LDK Solar originally planned to use the funds to pay down its short-term debts, but the recent increase in interest rates exceeded its original expectations," the announcement said.

Morgan Stanley was the bookrunner for the Rule 144A and Regulation S notes.

Alfa Bank, GTB well bid

In trading, some banks from emerging markets started off Thursday on firmer footing, with particularly good support for Russia's Alfa Bank.

"The Alfa curve is very well bid today, with Alfa's 2021s up almost a point on the day," a trader said in the morning.

The notes, which priced at par on April 19, were seen at 103.437 bid, 103.787 offered.

Another lender that saw solid gains was Nigeria's GTB Finance BV, which priced $500 million 7½% notes due 2016 at 98.981 on May 12. The notes - guaranteed by Guaranty Trust Bank plc - traded at 101.60 bid, 102.10 offered on Thursday.

Belarus performs

Belarus was another standout on Thursday, following the news that the sovereign would likely get up to $3.5 billion in bailout funds from the Eurasian Economic Community.

"Belarus just gapped up," a source said.

The sovereign's 8¾% 2015 notes were trading at 95.75 bid, 96.50 offered while its 8.95% 2018s were seen at 93.25 bid, 94 offered.

Meanwhile, notes from Turkey's corporates didn't fare as well. Though they had a firm start to the day, activity was low and they began trading weaker as Thursday went on.

Kazakhstan banks mixed

From Kazakhstan, Kazkommertsbank received good interest while BTA Bank lagged, drifting lower to 97, a trader said.

He also noted solid interest in the 2014 notes from Dubai.

"Other low-betas like South Africa, Qatar and Turkey did finally reprice down a half-point to a point," he said. "The star performer today was Egypt, up 1½ points on chatter that [president Barack Obama] would push for debt forgiveness."

Also from the Middle East and North Africa region, the $400 million 4.715% sukuk notes due 2016 from the United Arab Emirates' SIB Sukuk Co. II Ltd. were trading up on Thursday.

The notes - guaranteed by Sharjah Islamic Bank - priced Wednesday at a spread of 270 bps over mid-swaps via Standard Chartered Bank and HSBC in a Regulation S transaction.

"That's 40 bps tighter in the first 24 hours," a source said.

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