Baidu, Bermuda do deals; spreads tighten a touch; Jafza notes popular; Dubai sees sellers

By Christine Van Dusen

Atlanta, July 30 - China's Baidu Inc. and Bermuda sold notes on Tuesday during a slightly busier trading session that still saw thin liquidity.

Spreads narrowed a touch, with the Markit iTraxx SovX CEEME ex-EU index spread on Tuesday tightening 2 basis points to 224 bps over Treasuries, while the Markit iTraxx Crossover index spread - seen Monday at 412 bps - narrowed to 405 bps over Treasuries.

"There's a pick-up in activity versus yesterday, but to be honest, that wasn't hard," a London-based trader said. "Still a thin and tricky market."

The 2019 notes from Jebel Ali Free Zone (Jafza) were trading at 111 bid, 112 offered on Tuesday, about 14 bps tighter.

"Popular today," he said.

Saudi Electricity Co. bonds felt well offered, he said.

"Elsewhere, International Petroleum Investment Co. is a tad heavy," he said. "I still like Qtel International's 2028s over 2043s."

Some selling was seen for Dubai notes, which were snapped up by retail investors.

"Liquidity remains thin and poor," the London trader said. "If anything, Middle East and North Africa bonds were a little softer into the afternoon, with some paper coming out."

Sovereign bonds from Turkey were slightly tighter while Turkish banks were selling off.

"A much more active opening today, despite investors awaiting key events this week," a London-based analyst said.

She noted that some positive news came out of Asia, as the People's Bank of China received its first liquidity injection in several months.

Russia-based Uralkali saw its bonds trade down one point on Tuesday morning after news that potash prices are expected to decline about 25% due to a change in trading strategy, the analyst said.

"Other Russian names generally under pressure," she said.

Latin America light

Most Latin American sovereign bonds were unchanged on Tuesday, a New York-based trader said.

"Volumes remain lighter then prior weeks as we consolidate, wait on the Fed, and US non-farm payroll data later in the week," she said.

Most of the limited activity took place on the sell side, she said.

On the corporate side, Tuesday was mostly quiet, another New York-based trader said.

Sellers emerged for Brazilian corporates like Vale SA, he said.

"At one point it was so quiet today it seemed like our market was not even open," he said. "Lack of conviction heading into August will keep many sidelined."

Middle East in focus

Also on Tuesday, Kuwait-based Kipco's 2020s were offering some value, the London trader said.

"National Bank of Abu Dhabi continues to trade well, especially the 2015s and 2017s, which have clearly had some decent sponsorship over the past five to six weeks," he said. "Perpetuals were a tad softer."

Qatari Diar's 2020s were underperforming while National Bank of Abu Dhabi's notes were "a rock," he said.

"Lebanon has a sneaky bid here," he said. "Emaar Properties had good numbers versus yesterday. The bonds are holding well."

Ghana notes dip

Ghana's new 7 7/8% notes due 2023 closed Tuesday at 99½ bid, par offered after Monday's levels of 99¾ bid, 100½ offered, a trader said.

The notes hit a high of 101 3/8 during the previous week.

Barclays and Citigroup were bookrunners for the Rule 144A and Regulation S deal.

Bahrain down from high

The $750 million issue of 6.273% notes due 2018 that Bahrain priced at par closed Tuesday at 100.12 bid, 100.37 offered, a trader said.

The notes opened Monday at 100¾ bid, 101¼ offered. Last week the high was 101 5/8.

BNP Paribas, Citigroup and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Ruwais bonds up from reoffer

The recent notes from Abu Dhabi-based Ruwais Power Co., a consortium led by Abu Dhabi National Energy Co. (TAQA), traded between 103½ and 104 on Tuesday after pricing at par.

"Not many loose bonds out there," the London trader said.

BNP Paribas, Citigroup, HSBC, Mitsubishi UFJ, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The proceeds will be used to finance the Shuweihat 2 independent water and power project.

BankMuscat tightens

Oman's BankMuscat saw its recent 2½% notes due 2018 trade Tuesday in the 98 to 98¾ context, a trader said.

"That's about 29 bps tighter on the month," he said.

On Monday the notes were spotted at 98 bid, 99 offered after pricing at 99.302.

Citigroup, Credit Agricole CIB, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S deal.

"It has had a decent run, having traded below 96 at one point in June," he said.

Baidu sells bonds

China-based Internet search provider Baidu hit Tuesday's market with $1 billion 3¼% senior unsecured notes due 2018, according to an FWP filing with the Securities and Exchange Commission and an informed source.

The notes priced at 99.835 to yield 3.286% or Treasuries plus 190 bps.

Talk was set in the area of 195 bps over Treasuries.

J.P. Morgan Securities LLC and Goldman Sachs (Asia) LLC were the bookrunners.

The proceeds from the deal will be used for general corporate purposes, including merger and acquisition activities.

New issue from Bermuda

Bermuda sold $750 million 4.854% notes due February 2024 at a spread of Treasuries plus 225 bps, a market source said.

The notes priced tighter than talk, set at Treasuries plus 237.5 bps to 250 bps.

Barclays and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Market sources also were whispering about a possible issue of eurobonds from Belarus, which could come to the market in September.

Eskom sets price talk

South African electricity provider Eskom Holdings SOC Ltd. set price talk in the low-7% area for its dollar-denominated issue of notes due in 10 years, a market source said.

"Eskom have announced a new 10-year coming cheap to the curve," the analyst said. "The secondary has widened 20 bps this morning while the rest of the Middle East and North Africa is generally seeing a more active, better tone."

Barclays and Citigroup are the bookrunners for the Rule 144A and Regulation S deal, which is expected to price on Tuesday.

The company's existing notes were wider by about 30 bps early in the session, while the South Africa sovereign's bonds were wider by about 5 bps, a trader said.

Later, Eskom's 2021s were trading at 98 bid, 98 5/8 offered.

Aleesia Forni contributed to this article.

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