Dar Al-Arkan prices bonds as EM spreads struggle; volatility for Qtel, SECO 2041s

By Christine Van Dusen

Atlanta, May 21 - Saudi Arabia's Dar Al-Arkan Real Estate Development Co. printed notes on Tuesday as weakness in U.S. Treasuries led to a choppy and volatile session with poor liquidity.

"The market is, overall, struggling," a London-based trader said. "Spreads are struggling as the market activity traded for the most part on the left hand side of the screen. Been some time since market was this well offered and a few events globally seem to be combining to make the humble flow trader feel like George Clooney in 'The Perfect Storm.'"

Some of the most volatile bonds were long-dated, like Qatar-based Qtel International's 2043s, Dubai's 2043s and Saudi Electricity Co. (SECO)'s 2043s.

Fewer sellers than usual were seen for International Petroleum Investment Co. (IPIC)'s 2041s and Abu Dhabi National Energy Co.'s (TAQA) 2036s.

"TAQA was a good 4 basis points to 8 bps wider, although the 2023s were again the heaviest, closing at 15 bps on the week now," the London trader said.

"The three- to seven-year part of the curve on names with some sort of spread is probably not a bad place to be, and names like Dubai Electricity and Water Authority (DEWA)'s 2016s and 2020s, Kipco's 2020s and DPWorld's 2017s didn't appear to come under much selling pressure today at all," he said.

Perpetual notes from the Middle East felt well-offered for most of the session, a trader said.

"We did see a couple of larger accounts dipping their toe on selected favorite names," he said. "I still think picking one's credits and sticking to the right part of the curve in this part of the world offers better technicals than a lot of others."

In deal-related news, Dubai's Polarcus Ltd. considered issuing notes, Malaysia's Cagamas Berhad planned bonds, Dubai's Emirates NBD PJSC gave initial guidance and India's Syndicate Bank picked bookrunners.

Middle East in focus

In other trading on Tuesday, some demand was noted for SECO's 2017s and 2023s, the London trader said.

Dolphin Energy's bonds are 7 bps to 13 bps wider on the week, he said.

"DPWorld's 2017s are still a good value, to my mind," he said. "That's a buy-on-dip bond."

Investors were nibbling at bonds from Jafza Holdings, he said.

"Lebanon remains in the doldrums," he said.

Ukraine bonds see demand

From Ukraine, sovereign bonds have been advancing so far this week following Friday's late-day rally, said Svitlana Rusakova of Dragon Capital.

"With no obvious news drivers, it seems the move has been fueled by some real money demand," she said. "Corporates remained low-beta versus the sovereign."

Dar Al-Arkan does deal

In its new deal, Saudi Arabia-based developer Dar Al-Arkan priced a $450 million issue of 5¾% Islamic bonds due 2018 at 99.465 to yield 5 7/8%, or mid-swaps plus 486.5 bps.

The notes priced tighter than talk, initially set in the 6¼% area.

Bank Al Khair, Deutsche Bank, Emirates NBD, Goldman Sachs, Masraf Al Rayan and QInvest were the bookrunners for the Regulation S issue of Islamic bonds.

The proceeds will be used to fund the company's projects.

"Today Dar Al-Arkan got their five-year deal away," the London trader said. "Impressive if one looks back at the life of Dar Al-Arkan over the past 18 months. This is some achievement."

Meanwhile the company's existing 2015 notes were steady in trading, he said.

Polarcus, Cagamus notes ahead

Dubai-based marine geophysical company Polarcus is considering an issue of $95 million bonds due in June 2018 with ABG Sundal Collier, DNB Markets and Pareto Securities.

The proceeds will be used to refinance existing debt.

And Malaysia-based mortgage company Cagamas is planning a dollar-denominated issue of global bonds and Islamic bonds, a market source said.

The proceeds will be used to purchase loans and debt.

Emirates talks bonds

Dubai-based financial services company Emirates NBD gave initial guidance in the low-6% area for its dollar-denominated issue of benchmark-sized perpetual notes, a market source said.

BofA Merrill Lynch, Deutsche Bank, Emirates NBD, HSBC, ING and Morgan Stanley are the bookrunners for the Regulation S deal.

Pricing is expected to take place as soon as Wednesday.

And India's Syndicate Bank has picked Citigroup, Deutsche Bank, HSBC, JPMorgan and Standard Chartered Bank as bookrunners for a roadshow that will begin Thursday and take place in Asia and Europe.

Fantasia sells notes

On Monday, China-based property developer Fantasia Holdings Group priced RMB 1 billion 7 7/8% notes due 2016 at par to yield 7 7/8%, a market source said

The notes were talked at a yield in the 8% area.

BofA Merrill Lynch, Citigroup, HSBC and China Merchants Securities were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance existing indebtedness, finance existing and new property development projects and for general corporate purposes.

Powerlong oversubscribed

The final book for China-based real estate company Powerlong Real Estate Holding Ltd.'s RMB 800 million issue of 9½% notes due 2016 was RMB 1.8 billion from about 60 accounts, a market source said.

The notes priced at par with BofA Merrill Lynch, Deutsche Bank, HSBC and RBS in a Regulation S deal.

About 98% of the orders came from Asia and 2% from Europe.

Private banks accounted for 64%, funds 26% and banks 10%.

The proceeds will be used to refinance existing indebtedness.

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