Primary hosts Russia, Three Gorges, Etihad; Lat-Am performance improves; Turkey falters

By Christine Van Dusen

Atlanta, May 24 – Russia, China Three Gorges Corp., China Construction Bank Corp., Abu Dhabi’s Etihad Airways Partners, Buenos Aires and Dubai’s Noor Bank PJSC sold notes on Tuesday as better sentiment, driven by a rally in equities and commodities, helped credits from Latin America move tighter and higher.

Five-year credit defaults swaps spreads for Brazil closed on Tuesday at 356 basis points from 362 bps, while Mexico’s moved to 177 bps from 182 bps.

“Cash prices were under some pressure for a good chunk of the day, as U.S. Treasury weakness pressured low-beta bonds,” a New York-based trader said. “We did see a nice end-of-day bounce, which coincided with Treasuries paring some losses from the intraday lows hit just prior to the two-year auction.”

High-yield names from the region were firmer on the day, he said.

Venezuela’s 2027s closed at 43 from 42.25, PDVSA’s 2017s ended at 69.50 from 66.15, and Argentina’s Bonar 2024s closed at 109.875 from 109.50. The sovereign’s new 2026s ended the day at 103.65 from 103.10.

“Flows picked up a bit today from yesterday, with two-way inquiry,” he said.

Other bonds from emerging markets started off sluggish, as oil prices dipped, then recovered somewhat after future rallied on a report from the American Petroleum Institute that showed a decline in supply for the week ended May 20.

“We start slightly weaker into the day, driven by lower oil prices and some U.S. dollar strength,” a London-based strategist said. “Turkey credit opens circa 5 bps wider on cash while credit default swaps trade at 284 bps, 2 bps wider.”

Russia prints bonds

In Russia’s new deal – which some sources doubted would materialize, given the sanctions against the country – the sovereign sold $1.75 billion 4¾% notes due 2027 at par to yield 4¾%, or mid-swaps plus 303 bps, a market source said.

The notes were initially talked at a yield of 4.65% to 4.9%.

VTB Capital was the sole bookrunner for the Rule 144A and Regulation S deal.

The sovereign says the proceeds won't go to any sanctioned entities.

Three Gorges issues

Power company China Three Gorges priced a two-tranche issue of $1.5 billion notes due 2021 and 2026 in a Rule 144A and Regulation S deal, a market source said.

The deal included $500 million 2.3% notes due 2021 that priced at 99.962 to yield 2.308%, or Treasuries plus 90 bps.

The $1 billion 3¾% notes due 2026 priced at 99.804 to yield 3.173%, or Treasuries plus 130 bps.

JPMorgan, Deutsche Bank, ICBC, Bank of China, Goldman Sachs and UBS were the bookrunners for the deal.

Deal from CCB

In another new issue, China Construction Bank sold $1 billion of notes due 2019 and 2021, a market source said.

The deal included $400 million 2 3/8% notes due 2019 that priced at 99.243 to yield 2.639%, or Treasuries plus 155 bps.

The $600 million 2¾% notes due 2021 priced at 98.477 to yield 3.081%, or Treasuries plus 168 bps.

CCB International, HSBC, Morgan Stanley, Standard Chartered Bank, ANZ, MUFG, China Construction Bank, BofA Merrill Lynch, DBS Bank and Citigroup were the bookrunners for the Regulation S deal.

The proceeds will be used for general corporate purposes.

Etihad sells notes

Abu Dhabi’s Etihad Airways Partners – via EA Partners II BV – priced a $500 million issue of 6¾% notes due 2021 at par to yield 6¾%, a market source said.

Goldman Sachs, ADS Securities, Anoa Capital and Integrated Capital were the bookrunners for the Regulation S deal.

Noor Bank prints bonds

Tuesday also saw Dubai’s Noor Bank sell $500 million 6¼% perpetual notes at par to yield 6¼%, or mid-swaps plus 490.5 bps, a market source said.

Citigroup and Standard Chartered were the joint global coordinators. Citigroup, Dubai Islamic Bank, Emirates NBD Capital, First Gulf Bank, Noor Bank, Sharjah Islamic Bank and Standard Chartered Bank were the joint leads.

Buenos Aires brings deal

Buenos Aires priced $890 million 7½% notes due June 1, 2027 at 99.138 to yield 7 5/8%, a market source said.

BofA Merrill Lynch, Deutsche Bank and HSBC were the bookrunners for the deal.

Other details were not immediately available on Tuesday.

DP World launches notes

Dubai’s DP World launched at $1.2 billion issue of seven-year notes at 237.5 bps over mid-swaps, a market source said.

Citigroup, Deutsche Bank, Dubai Islamic Bank, HSBC, Barclays, Emirates NBD Capital, First Gulf Bank, JPMorgan, National Bank of Abu Dhabi and Societe Generale CIB are the bookrunners for the sukuk.

The proceeds will be used for a tender offer for the company’s sukuk due in 2017.

“Dubai 2023 sukuks are currently pricing at z-spread plus 215 bps bid,” he said. “Dubai 2020 sovereign bonds currently trade in line with DP World’s 2020s, but trade at a substantial high cash price.”

DP World’s new bonds look “attractive at this level,” he said. “DP World is not a frequent issuer and will use the proceeds to tender the existing 2017 sukuks, with any excess to be used for general corporate purposes.”

EIB does deal

On Monday, Dubai-based lender Emirates Islamic Bank priced $750 million 3.542% notes due May 31, 2021 at par to yield 3.542%, a market source said.

HSBC, Standard Chartered, Emirates NBD, Dubai Islamic Bank, Noor Bank and Bank ABC are the bookrunners for the Regulation S sukuk.

Green bond from Axis Bank

India’s Axis Bank Ltd. priced $500 million 2 7/8% green bonds due June 1, 2021 at 99.479 to yield 2.988%, or Treasuries plus 160 bps, according to a market source and the company.

Axis Bank, BofA Merrill Lynch, Citigroup, Credit Agricole CIB, HSBC, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to finance eligible green projects.

“After launch of the deal in Asia and opening of the books, the deal saw swift build up and was oversubscribed circa 2.2 times,” according to a statement from the company, which also called the deal “the tightest issue by an Indian bank since the global financial crisis.”

About 48% of the orders came from Asia, 25% from Europe, 11% from the Middle East and 16% from the United States.

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