New issues from First Gulf, Turkey; Transnet on deck; spreads mixed, trading active for EM

By Christine Van Dusen

Atlanta, Nov. 5 - Abu Dhabi's First Gulf Bank PJSC and Turkey sold bonds and several others gave guidance for new deals on a mixed and busy Tuesday for emerging markets assets.

Setting talk during the session were South Africa's Transnet SOC, Mexico's Cobre Del Mayo SA de CV, Guatemala's Banco de los Trabajadores (Bantrab) and Peru's Andino Investment Holding.

"A mixed open in Central and emerging Europe, the Middle East and Asia, with the potential for further new issues this week," a London-based analyst said. "Turkey credit default swap spreads are 2 basis points to 3 bps wider and Russian banks are under some pressure. But the Middle East and North Africa are opening somewhat firmer."

The Markit iTraxx SovX CEEME ex-EU index spread on Tuesday opened at 234 basis points over Treasuries, 1 bp wider than Monday. The corporate index, seen Monday at 255 bps over Treasuries, narrowed by 1 bp on Tuesday morning.

In the secondary market, Qatar National Bank's 2018 bonds were under pressure, trading with a 98 handle, a London-based trader said.

"At the moment we seem to have an offered market and supply and 2.67% on the 10-year Treasury," he said. "November is certainly starting off on the back foot after a fairly solid October."

In other trading, Latin American corporate bonds remained weakened, a New York-based trader said.

"Spread-traded credits moved about 5 bps wider," he said. "Price-based credits also saw their biggest move left in a single day in quite some time."

Odebrecht recovers slightly

Only a handful of Latin American credits - including Colombia Telecomunicaciones SA and Brazil's Odebrecht SA - recovered somewhat into the close, the New York trader said.

"This downtrade is being led very distinctly by financials, as it slowly started in Brazil before quickly working its way into Peru, Colombia and Mexico," he said.

Peruvian banks have been hit the hardest, he said.

"They had previously enjoyed the biggest run higher into what is now amounting to a very hard leg down," he said.

OGX, OSX firm up

Also from Latin America, OGX Petroleo e Gas Participacoes SA - the Brazil-based oil producer that recently declared bankruptcy - saw its bonds rise on the news that sister company OSX Brasil SA had secured a $175 million refinancing loan 17 days after the company's debt had become due and payable.

OGX's 8½% notes due 2018 "inched up a little," a trader said, pegging the debt in a 9 to 10 range. OSX's 9¼% notes due 2015 were quoted at 82 bid, 84 offered.

OSX paper also ended the session firmer.

After OGX sought bankruptcy protections in Brazil last week, there was some concern that OSX - created to provide transport vessels for OGX's oil output - would soon follow. Tuesday's loan provided OSX with a lifeline.

MAF moves lower

The new perpetual notes from Dubai's Majid Al Futtaim Holding LLC (MAF) continued to tick lower in trading on Tuesday, a trader said.

The conglomerate priced a $500 million issue of 7 1/8% perpetual notes at par to yield 7 1/8% via bookrunners BofA Merrill Lynch, Emirates NBC, Goldman Sachs, HSBC, JPMorgan and Standard Chartered Bank in a Regulation S deal.

On Tuesday morning, the notes were quoted at 99.

GTB ticks down

The new issue of notes from Nigeria's GTB Finance BV - $400 million 6% notes due 2018 that priced at 99.469 to yield mid-swaps plus 464.1 bps - opened Tuesday at 98.65 bid, 99.45 offered, a trader said.

The Regulation S notes, which came to the market via JPMorgan and Morgan Stanley, later traded at 98.18 bid, 99.18 offered.

"Not too frequent a borrower," he said. "Tricky from the word 'go' on this one. It's not for everyone, this Nigerian bank space. But it does offer decent pick-up versus the sovereign and South African financials."

The notes "steadily ticked down as the day went on," he said. "We close at 98¼ bid, 98.55 offered."

Russia, Ukraine in focus

Bonds from Russia, meanwhile, moved up on Wednesday, according to a report from UFS Investment Co.

"We keep expectations for the strengthening of the Russian eurobond market by the end of this week," the report said. "In the coming days the market may be an influenced by the delayed data on the US trade balance and unemployment claims on Thursday, as well as data on durable goods and consumer sentiment index on Friday."

From Ukraine, trading has been somewhat volatile so far this week, said Svitlana Rusakova of Dragon Capital.

First Gulf Bank sells notes

In its new deal, Abu Dhabi's First Gulf Bank sold $500 million 3¼% notes due 2019 at 99.274 to yield 3.405%, or mid-swaps plus 180 bps, a market source said.

The notes were initially talked at a spread in the mid-swaps plus 185 bps area.

BofA Merrill Lynch, Citigroup, Deutsche Bank, HSBC Holdings and First Gulf Bank were the bookrunners for the Regulation S-only deal.

"The 185 bps area looks OK at first glance," a London-based trader said prior to the pricing. "National Bank of Abu Dhabi's August 2019s are bid at 133 bps over."

Turkey prices bonds

Turkey priced a €1.25 billion issue of 4.35% notes due 2021 at 99.339 to yield 4.45%, according to a filing from the sovereign and another market source.

Barclays, Credit Suisse and Deutsche Bank were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general financing purposes, including the repayment of debt.

Transnet sets talk

South African rail, port and pipeline company Transnet gave guidance of 9 1/8% to 9¼% for its upcoming issue of benchmark-sized and South African rand-denominated notes due in May of 2021, according to an informed market source.

The notes are expected to price on Wednesday.

Deutsche Bank is the bookrunner for the Rule 144A and Regulation S deal.

Guidance from LatAm corporates

Mexico-based mining company Cobre Del Mayo set initial talk in the 11% area for its upcoming $225 million issue of five-year notes via Jefferies, BCP Securities and Nomura Securities in a Regulation S deal.

And Guatemala-based lender Bantrab set initial talk in the low-9% area for its $150 million issue of seven-year notes, a market source said.

The deal is expected to price as soon as Wednesday.

Deutsche Bank and BCP Securities are the bookrunners for the Rule 144A and Regulation S deal.

Andino whispers guidance

Peru's Andino Investment Holding whispered guidance in the 10% area for its upcoming $130 million issue of seven-year notes (expected ratings: /B+/BB-), a market source said.

BofA Merrill Lynch, Credicorp and Goldman Sachs are the bookrunners for the Rule 144A and Regulation S deal.

The notes are non-callable for three years.

Pricing is expected to take place on Wednesday.

The issuer is based in Callao, Peru and owns and operates port infrastructure and offers logistics services.

Serbia sets roadshow

Serbia will embark on a roadshow starting Wednesday for a dollar-denominated issue of notes, a market source said.

The marketing trip will begin in Boston and travel to New York, San Francisco and Los Angeles before concluding on Nov. 11 in London.

A Rule 144A and Regulation S deal is expected to follow.

Diamond Bank cancels plans

Nigeria's Diamond Bank plc has canceled plans to issue dollar-denominated bonds, a market source said.

The company previously held a roadshow with African Export-Import Bank and BNP Paribas for a Rule 144A and Regulation S issue.

No other details were immediately available on Tuesday.

Eurasia Drilling earnings

Russia's Eurasia Drilling Co. Ltd. released its earnings results for the third quarter, showing that revenues rose by about 12%, year-over-year, UFS said.

"The company said that its net debt on Sept. 30 was $254 million, which is more than two times lower than on June 30," the bank said in its report. "We evaluate the results published for the third quarter as moderately positive in terms of the credit profile of the issuer."

But the company's 2020 eurobond, at a yield 5.02%, has "limited potential for price growth against the background of a 65-bps yield reduction since the beginning of October," UFS said.

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