Croatia, Kiev, Banco BTG Pactual print notes; quarter's end draws buyers; volumes light

By Christine Van Dusen

Atlanta, June 30 - The Republic of Croatia, the City of Kiev and Brazil's Banco BTG Pactual SA (Cayman branch) sold notes on Thursday as Greece officials voted for the last austerity measures required to secure the sovereign's next round of bailout funds.

The JPMorgan Emerging Markets Bond Index Plus spread was seen at Treasuries plus 271 basis points on Thursday, the tightest seen in more than a month.

"Emerging markets are enjoying another very strong morning today, no doubt boosted by the market's desire to have some nice marks at the end of the first half of 2011," a trader said.

Investors did some buying on Thursday to close out the quarter, according to a buyside source, with particular attention paid to Argentina and Venezuela.

"We've had a better tone for the last few days," she said. "There's been some comfort from the Greek vote passing and so there has been some buying into the quarter end. A lot of investors had some cash positions that they didn't want to leave open for the quarter end, so there's been some buying today. So I'd say in general it's been more positive and we're cautiously comfortable."

Still, volumes remained somewhat thin. And issuance is only slowly picking up.

"There's not a lot of volume, but it's enough to stabilize the market in the absence of any more negative news," she said. "Next week there will be more issuance coming. But for now, it's fairly quiet."

Croatia sells bonds

In its new deal, Croatia sold €750 million 5 7/8% notes due July 9, 2018 at 98.6 to yield mid-swaps plus 300 bps, a market source said.

The notes priced in line with talk, which was set at the mid-swaps plus 300 bps area and looked a bit cheap, a trader said.

Deutsche Bank, HSBC and UniCredit were the bookrunners for the Regulation S-only transaction.

"We believe at this level it is fairly priced," he said.

The deal at first traded down before snapping back to reoffer.

BTG Pactual prices notes

In another new deal, Brazil-based lender Banco BTG Pactual priced $500 million 4 7/8% notes due July 8, 2016 at 99.453 to yield 5%, or Treasuries plus 330.3 bps, a market source said.

The notes priced in line with talk, which was set at the 5 1/8% area.

BTG Pactual, JPMorgan and BBI Bradesco were the bookrunners for the Rule 144A and Regulation S offering.

Proceeds will be used for general corporate purposes.

Kiev does deal

And Kiev printed $300 million 9 3/8% loan participation notes due July 11, 2016 at par, a market source said.

The notes priced at the tight end of talk, which was set at 9 3/8% to 9½%.

Credit Suisse, Deutsche Bank, Vnesheconombank and VTB Capital were the bookrunners for the Rule 144A and Regulation S notes.

Proceeds will be used to refinance a $200 million eurobond due July 15 and for general budgetary purposes.

Ahead of the pricing, Kiev's 2015 notes were seeing some retail selling.

"Kiev launched their five-year dollar notes at 9 3/8%, which is impressive, given the rate moves during the book-building process," a trader said.

Bank of Moscow inches up

With the Bank of Moscow close to receiving a RUB 250 billion bailout, the lender's 6.8% notes due 2017 were seen at 98.75 bid, 99.50 offered after trading Wednesday at 97 bid, 98 offered.

"The flow is much more two-way than yesterday's buying frenzy," a trader said.

Meanwhile, the Middle East was largely quiet due to the holidays, though Dubai's 2021 dollar notes did trade up at par for the first time, a trader said.

Turkey corporates firm

In early trading, Turkey didn't see much of a rally for its sovereign bonds, even as the country's year-over-year gross domestic product numbers came in strong. Tempering that good news was the fact that the trade deficit had widened to a record level.

"Corporates are slightly firmer as well," a trader said, who noted buying interest for Garanti Bankasi AS' 2021s and selling for Garanti's 2017s.

As the day went on, Turkey "put in a great performance today, 20 bps tighter on cash," he said. "At least they posted amazing first-quarter GDP data."

Kazakhstan's BTA Bank was also in focus on Thursday, with its 2018 dollar notes trading at 80 on solid volume, he said.

Benchmark bonds in focus

Taking a closer look at benchmark assets' performance during the last six months, most names - including Turkey's 2030s, Russia's 2030s, Ukraine's 2020s and Qatar's 2020s - were all within about 1 to 2 points of their January levels, a trader said.

"It's not until you look at KazMunaiGas' 2021s, which are up 6 points, or Dubai's 2020s that are up 10 points that you see some performance," he said. "The EMBI has gone from 240 [bps] out to 270 [bps], or 305 [bps] only four days ago. And among that, there have been plenty of well publicized landmines.

"All I can say is that I have never been picked off, been run over or made as many bad calls as I have in the last six months."

© 2015 Prospect News.
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