Korea East-West Power, Pemex sell notes as spreads tighten; Serbia sets talk for dollar notes

By Christine Van Dusen

Atlanta, Nov. 21 - Korea East-West Power Co. Ltd. and Mexico's Petroleos Mexicanos SAB de CV (Pemex) sold notes on a Thursday that saw most spreads tighten, in spite of a strong sell-off in U.S. Treasuries.

In trading on Thursday, Dubai's Emaar Properties saw its 2019 dollar notes widen by 50 basis points on the month as it considered breaking off its retail operations into a separate business, a London-based trader said.

Qatar's 2023 bonds were quoted at 97 bid, 97 5/8 offered.

"The Middle East and North Africa remain very solid indeed," he said.

Bonds from Ukraine drifted lower toward the later half of the week, said Svitlana Rusakova of Dragon Capital.

But several bonds managed to halt the decline and get a lift, including the sovereign's 2017s, 2020s and 2022s, she said.

"We continued to see demand in quasi-sovereign banks," she said. "Not much on the offer, currently."

For bonds from Latin America, it was a choppy day as spread-based credits mostly moved wider, a New York-based trader said.

"Breadth has become thin once again with not many different dollar-priced credits trading, and it's once again challenging to do anything with a chunky size for a particular bond," he said. "Overall, clients continue to be better sellers by a large margin."

Meanwhile, China Mengniu Dairy Co. Ltd. launched a dollar-denominated issue of notes, Serbia set talk, JSC National Co. Kazakhstan Engineering gave guidance, and Panama was looking to price an add-on.

Pemex prices notes

Mexico-based petrochemical company Pemex priced a €1.3 billion issue of 3 1/8% notes due 2020 at 99.358 to yield 3.229%, or mid-swaps plus 173 bps, a market source said.

BBVA, Credit Suisse and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to finance the company's investment program, for working capital needs and to redeem, repurchase or refinance indebtedness.

Korean utility does deal

Korea East-West Power sold $500 million 2 5/8% notes due 2018 at 99.387 to yield 2.757%, or Treasuries plus 140 bps.

The notes were talked at a spread in the 145 bps area.

BofA Merrill Lynch, Citigroup, Credit Suisse, HSBC and UBS were the bookrunners for the Rule 144A and Regulation S notes.

The issuer is an electricity generator and supplier based in Seoul, South Korea.

Chinese dairy launches bonds

Hong Kong-based China Mengniu Dairy launched a $500 million issue of notes due 2018 at Treasuries plus 225 bps, a market source said.

Standard Chartered Bank, Deutsche Bank, HSBC and Barclays are the bookrunners for the Regulation S deal.

And Serbia set talk in the 6¼% area for its upcoming dollar-denominated issue of five-year notes with Citigroup and Deutsche Bank in a Rule 144A and Regulation S deal.

Kazakh issuer sets talk

Kazakhstan Engineering gave initial guidance of 4½% to 4 7/8% for a $200 million three-year bond, a market source said.

Halyk Finance, UBS and VTB Capital are the joint lead managers and bookrunners for the Regulation S-only deal.

Panama to price tap

Panama is looking to price an add-on to its existing dollar-denominated 5.2% notes due 2020, according to a filing.

Citigroup and JPMorgan are the bookrunners for the Securities and Exchange Commission-registered deal.

The original $1 billion issue priced on Nov. 23, 2009.

Gazprom Neft releases details

Russia's JSC Gazprom Neft released details on the $1.5 billion 6% notes due 2023 that priced on Wednesday.

The notes came to the market at par to yield 6%, following talk in the 6 1/8% area.

BofA Merrill Lynch, Credit Agricole, Gazprombank and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Gazprom Neft is a Moscow-based oil producer and part of gas company OJSC Gazprom.

"That's trading just above re-offer, currently," a trader said.

Dar Al-Arkan in focus

One London-based trader was keeping an eye on the new issue of notes from Saudi Arabia's Dar Al-Arkan Real Estate Development Co.

The developer priced a $300 million issue of 5¾% notes due 2016 at 99.323 to yield 6%, or Treasuries plus 541.7 bps, via Bank Alkhair, BofA Merrill Lynch, Deutsche Bank, Emirates NBC and Goldman Sachs.

"The group does not have any imminent need to raise funds or to meet short-term repayments," she said. "It also holds a solid liquidity position at present."

But free cash flow remains in the negative, she said.

"The biggest risks, in our view, are the limited visibility of the business, its execution risk and the cyclical nature of its business," she said.

BOC Aviation oversubscribed

The final book for Singapore-based BOC Aviation Pte. Ltd.'s RMB 1 billion issue of 4½% notes due 2018 that priced at par was more than RMB 3.8 billion from 68 accounts, a market source said.

The notes priced to yield 4½% with bookrunners BOC International, HSBC and Standard Chartered Bank in a Regulation S deal.

About 69% of the orders came from Hong Kong, 24% from Singapore and 7% from others.

Asset and fund managers picked up 63%, banks and private banks 28%, insurers and sovereign wealth funds 7% and others 2%.

Croatia final book

The Republic of Croatia's new $1.75 billion issue of 6% notes drew a final book of $7 billion, a market source said.

The notes priced at 98.488 to yield 6.2% with Barclays, BNP Paribas, Deutsche Bank AG London Branch and J.P. Morgan Securities plc in a Rule 144A and Regulation S transaction.

About 44% of the orders came from the United States, 26% from Europe, 26% from the United Kingdom and 4% from others.

Fund managers accounted for 83%, retail and banks 13% and others 4%.

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