Flurry of new deals from EM; new notes from QNB, MAF active in trading; Kaspi bond on deck

By Christine Van Dusen

Atlanta, Oct. 24 - Investors fears remained calmed on Thursday while numerous emerging markets issuers priced new deals, including Chile's Empresa Nacional de Telecommunicaciones SA (Entel), China's Evergrande Real Estate Group Ltd., India's HDFC Bank Ltd. and Korea's Nonghyup Bank.

Also bringing new bonds to the market were Sri Lanka's Development Finance Corporation of Ceylon (DFCC Bank) and Turkey's Turkiye Vakiflar Bankasi TAO (Vakifbank).

Meanwhile, the Markit iTraxx corporate index spread - seen Wednesday at Treasuries plus 344 basis points - was flat on Thursday. And trading was busy.

One trader was particularly interested in Qatar National Bank SAQ's new two-tranche issue of $1.5 billion notes due 2016 and 2018.

The Regulation S deal included $750 million floating-rate notes due 2016 that priced at par to yield Libor plus 125 bps, tighter than talk.

Those notes traded on Thursday at 100½ bid, 100.62 offered before closing at 100½ bid, 100 5/8 offered.

"A senior floating-rate note from the Gulf Region for the first time in many a year, and it performed very well indeed," the trader said. "Very solid performance."

But the lender's $750 million tranche of 2¾% fixed-rate notes due 2018 did not fare as well in trading.

The notes priced at 99.459 to yield mid-swaps plus 145 bps - also tighter than talk - and headed into Thursday afternoon 99 1/8 bid, 99 3/8 offered. The notes closed at 99.15 bid, 99.30 offered

HSBC, Standard Chartered Bank, JPMorgan, RBS and Qatar National Bank were the bookrunners for the deal.

"The fixed didn't perform," the trader said. "Ten sellers for every one buyer, a very poorly placed deal. Dragged the QNB old 2018s and 2017s lower too."

Bank urges caution

Investors have responded favorably to recent weaker-than-expected jobs numbers from the United States, which seem to signal that the Federal Reserve will delay any tapering of its bond-buying program.

But some market-watchers caution against becoming too upbeat.

"We think the market is being too sanguine about the pace of policy normalization and risks are skewed towards higher rates," according to a report from Barclays. "We believe underlying activity is poised to accelerate as the fiscal drag fades away."

MAF closes lower

The new issue of notes from Dubai's Majid Al Futtaim Holding LLC (MAF) - $500 million 7 1/8% perpetual notes that priced at par - received some attention on Thursday.

The notes were initially talked at a yield in the mid- to high-7% area before guidance was set at 7 3/8%.

"Once again the syndicate desks have combined to print a deal at the tightest they thought humanly possible," a trader said. "They printed at 7 1/8% when 7¼% to 7 3/8% would have left something on the table and the deal would not be closing below reoffer."

Deal oversubscribed

The MAF deal attracted a final order book of $4 billion from 325 accounts, a market source said.

About 43% of the orders came from the United Kingdom, 28% from Europe, 14% from the Middle East and North Africa, 12% from Asia and 3% from others.

Fund managers picked up 64%, private banks 16%, banks 10%, corporates 3%, insurance 3% and others 4%.

BofA Merrill Lynch, Emirates NBC, Goldman Sachs, HSBC, JPMorgan and Standard Chartered Bank were the bookrunners for the Regulation S deal.

"Supply is definitely capping performance, in this space," a trader said.

Bahrain, Dubai trade well

In other trading from the Middle East, two-way flows were reported for some names but others were "lackluster," including some from Saudi Arabia, Qatar and Abu Dhabi, a London-based trader said.

"There's Kuwaiti buying interest today," he said. "Bahrain is still trading well, as did most of the Dubai complex."

Entel does deal

In its new deal, Santiago-based telecommunications company Entel priced $1 billion 4 7/8% notes due 2024 at 99.29 to yield 4.966%, or Treasuries plus 240 bps.

The notes priced tighter than talk, set in the area of 262.5 bps to 275 bps over Treasuries.

Citigroup and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to refinance debt and for general corporate purposes.

Evergrande prices notes

China-based Evergrande Real Estate priced a $1 billion issue of 8¾% notes due 2018 at par to yield 8¾%, a market source said.

Goldman Sachs, JPMorgan, Deutsche Bank and China Merchants Securities were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to refinance existing indebtedness.

Issuance from HDFC

In another new deal, Mumbai-based HDFC Bank priced $500 million 3% notes due 2016 at 99.618 to yield Treasuries plus 255 bps via BofA Merrill Lynch, Barclays, JPMorgan and Standard Chartered Bank in a Regulation S deal.

The deal attracted more than $2 billion in orders from more than 150 accounts, with 51% from the euro zone, 43% from Asia and 6% from the offshore United States.

Fund and asset managers picked up 63%, banks 27%, public institutions 5%, private banks 3% and insurers and pension funds 2%.

Nonghyup issues bonds

The day also saw Korea's Nonghyup Bank sell $300 million 2 5/8% notes due 2018 at 99.221 to yield 2.793%, or Treasuries plus 152.5 bps, a market source said.

The notes were talked at a spread in the 155 bps area.

Barclays, Citigroup, ING and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Nonghyup Bank is a Seoul, South Korea-based agricultural and commercial credit and banking services company.

DFCC prints notes

Sri Lanka's DFCC Bank priced a $100 million issue of 9 5/8% notes due 2018 at par to yield 9 5/8%, a market source said.

The notes were talked at a yield in the 9 5/8% area.

BofA Merrill Lynch and Citigroup were the bookrunners for the Regulation S deal.

The proceeds will be used to retire short-term borrowings, to on-lend for infrastructure development and for general corporate purposes.

Vakifbank prices deal

Turkey-based lender Vakifbank priced a $500 million issue of 5.149% notes due 2018 at 99.35 to yield mid-swaps plus 370 bps, a market source said.

The notes were talked at a spread in the 387.5 bps area.

Barclays, Goldman Sachs, HSBC, ING, National Bank of Abu Dhabi and Scotiabank were the bookrunners for the Rule 144A and Regulation S deal.

"This is not a surprising issue and should have been anticipated by the market," a London-based analyst said. "Overall, we remain neutral on the credit."

Corporates set talk

Kansas City Southern de Mexico set guidance in the Libor plus 75 bps area for its upcoming issue of $250 million notes due in three years via BofA Merrill Lynch, JPMorgan and Morgan Stanley in a Rule 144A and Regulation S deal.

And Kazakhstan's JSC Kaspi Bank gave initial guidance of 9¾% to 10% on its upcoming three-year issue of dollar notes, a market source said.

JPMorgan and VTB Capital are the joint bookrunners for the Rule 144A and Regulation S transaction. Resmi FIH JSC is the local arranger.

Vneshprombank, BEH set roadshows

Russian Foreign Economic Industrial Bank (Vneshprombank) will set out on Oct. 29 for a roadshow to market a dollar-denominated issue of notes, a market source said.

Otkritie Bank and Raiffeisen Bank International are arranging the Regulation S-only roadshow.

Bulgarian Energy Holding EAD will set out on Oct. 28 for a roadshow to market a euro-denominated issue of notes, a market source said.

Citigroup and Raiffeisen Bank International are the bookrunners for the Regulation S deal.

The roadshow will begin in Germany and travel to London before concluding on Oct. 30 in Vienna.

And Honduras is planning to issue dollar bonds in December, a market source said.

Brazil prints bonds

Brazil on Thursday announced it had printed a $3.2 billion issue of 4¼% notes due 2025 at 99.521 to yield Treasuries plus 180 bps

The deal is part of a tender offer for nine outstanding bonds. Approximately $1.7 billion of the new bonds were allocated to holders who validly tendered their bonds and whose orders were accepted, the announcement said.

Bradesco BBI, Deutsche Bank and HSBC were the bookrunners for the new Securities and Exchange Commission-registered bonds.

The sovereign went on to print an additional $50 million 4¼% notes due 2025 at 99.521 to yield 4.305%.

The proceeds will be used for liability management transactions and for general budgetary purposes.

Gazprombank does deal

In another deal from late on Wednesday, Russia's Gazprombank OJSC priced a €1 billion issue of 3.984% notes due 2018 par to yield 3.984%, or mid-swaps plus 280 bps, a market source said.

Citigroup, Credit Agricole, Deutsche Bank and GPB Financial Services were the bookrunners for the Regulation S marketing trip.

Gazprombank is a Moscow-based lender.

New issue from JBS

Brazil-based meat processor JBS SA priced a $1 billion issue of 7¾% notes due 2020 notes at par to yield 7¾%, a market source said.

The notes were initially talked in the 8 1/8% area.

BB Securities, Bradesco BBI, BTG Pactual, JPMorgan and Santander were the bookrunners for the Rule 144A and Regulation S deal.

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