African Development sells bonds; late-day rally for Lat-Am; Odebrecht postpones issuance

By Christine Van Dusen

Atlanta, June 13 - Tunisia's African Development Bank sold notes on a stronger Thursday for emerging markets assets, bolstered by news that the Federal Reserve is likely to keep short-term interest rates low.

Also contributing to the late-day rally was word that Turkey's government would consider holding a referendum on the construction project that started a string of increasingly violent protests.

Spreads started the day wider, with the Markit iTraxx SovX CEEME ex-EU index spread moving out 6 basis points and the Crossover index spread widening by 30 bps after the World Bank cut global growth forecasts, a London-based analyst said.

Turkey was 10 bps wider in cash bonds and 4 bps wider in credit default swaps spreads.

"A similar picture in Russia," she said.

But some assets, particularly those from Latin America, managed to get a big boost into the close on Thursday, a New York-based trader said.

"The [Fed] story gave Treasuries, and later our markets, the final strong push into the close," he said. "A huge day of spread tightening on the go-go spread credits."

Brazil's Petroleo Brasileiro SA (Petrobras) saw its 2023s and 2043s tighten as much as 15 bps.

"We saw some high-grade credits perform well into the rally," he said.

But trading, on the whole, was on the thin side. And some names were stagnant, including Banco Santander Brasil SA and Banco de Credito del Peru.

"If the rally holds, they will climb into the mix rather quickly," the New York trader said.

Some Turkish corporates - including Koc Holdings - performed well on the day.

"Busy day, with well over a page of trades," a London-based trader said.

IPIC sees demand

The London trader noted solid demand from local investors for International Petroleum Investment Co.'s 2020s and 2022s. The 2022s traded at 112 1/8 to 112 3/8 on Thursday.

"Also, late-on, we saw some demand for Dolphin Energy and some of the Dubai perpetuals," he said.

Dubai Islamic Bank's perpetual bond that priced at par closed at 98¼ bid, 98¾ offered while Abu Dhabi Islamic Bank's ended the session at 101½ bid, 102¼ offered. That bond also priced at par.

Jafza gets attention

Investors showed interest in Dubai-based Jebel Ali Free Zone's (Jafza) 2019s, which traded during the morning at 108 and closed at 110 to 111 after Moody's Investor Service upgraded the credit.

The notes are more than 90 bps wider on the month.

"Still skewed to better sellers," a trader said. "Going to remain choppy and whippy, I'd expect, for the rest of June, at least."

Meanwhile, Commercial Bank of Qatar's 2014 notes traded at 104¼ bid, 104¾ offered while its 2019s were quoted at 119¼ bid, 121¼ offered.

Africa in focus

From Africa, Tunisia's 4½% euro notes due 2020 - sighted last month at 95 bid, 97 offered - traded Thursday at 94 bid, 96 offered, a trader said.

Egypt's 5¾% 2020 dollar notes were seen Thursday at 84½ bid, 88½ offered after last month's 89 bid, 94 offered.

Senegal's 8¾% notes due 2021 moved Thursday to 110.12 bid, 112.12 offered after last month's levels of 119½ bid, 121½ offered.

And Morocco's 5½% 2042 notes traded Thursday at 91¼ bid, 94¼ offered. Last month the notes were seen at 97.87 bid, 99.37 offered. They priced at 97.464.

Barclays, BNP Paribas, Citigroup and Natixis were the bookrunners for the Rule 144A and Regulation S deal.

PDVSA makes gains

Petroleos de Venezuela SA's bonds have been under pressure but managed to put a few points back on during Thursday trading.

A trader saw the 8½% notes due 2017 up 3 points at 931/2, while the 5 3/8% notes due 2027 rose 1½ points to 62.

Mexican homebuilder Desarrolladora Homex SAB de CV was also firmer. Earlier in the week, the company announced that it had missed a coupon payment on its 9½% notes due 2019.

Those bonds moved up just over a point on Thursday, ending at 381/2.

But Brazil's OGX Petroleo & Gas Participacoes' bonds suffered. The 8½% notes due 2018 and the 8 3/8% notes due 2022 fell 6¾ points to 42¼ and 403/4, respectively.

ADB prices notes

In its new deal, Tunisia-based regional development lender African Development Bank priced $200 million 1 1/8% notes due 2017 at 100.791 to yield 0.909%, or mid-swaps minus 4 bps, a market source said.

Goldman Sachs and Standard Chartered Bank were the bookrunners for the deal.

Ukraine, SPP deals ahead

Ukraine is looking to issue notes sometime before the end of this summer, a market source said.

No other details were immediately available on Thursday.

And Slovakia-based natural gas supplier Slovensky Plynarensky Priemysel (SPP) mandated Citigroup and JPMorgan as bookrunners for an issue of bonds, a market source said.

Odebrecht shelves deal

Also on Thursday, Brazil's Odebrecht Drilling Norbe VIII/IX Ltd. has postponed a planned issue of dollar-denominated and benchmark-sized notes because of current market volatility, a market source said.

HSBC, Itau BBA and Morgan Stanley were the global coordinators for the Rule 144A and Regulation S deal. BB Securities, BNP Paribas and Santander were the bookrunners.

The proceeds were to be used for relief from existing project finance obligations.

A roadshow was held from May 27 to June 5.

Odebrecht Drilling is a subsidiary of Odebrecht Oleo e Gas SA, an offshore drilling company based in Rio de Janeiro.

Stephanie N. Rotondo contributed to this article.

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