Denizbank, Dolphin, TDIC plan notes as risk aversion rises; spreads widen; liquidity thins

By Christine Van Dusen

Atlanta, June 13 - Turkey's Denizbank AS, Indonesia's PT Tranka Kabel, San Antonio Internacional Ltd., Abu Dhabi-based Dolphin Energy Ltd. LLC and Abu Dhabi's Tourism Development & Investment Co. advanced deals on a Monday marked by reduced liquidity and slower issuance as safer assets reigned and investors were on holiday in Australia and most of Continental Europe.

"It's a slow, nervy start," a trader said.

Contributing to the shaky tone was Standard & Poor's downgrade of Greece to CCC, reflecting a higher likelihood of defaults. In response, spreads widened, with the JPMorgan Emerging Markets Bond Index Plus spread starting the day up 2 basis points before ending tighter by 1 bp, at Treasuries plus 288 bps.

"We're currently struggling under the current bout of global risk aversion and some good old last-in-first-out trading," a London-based trader said. "Overall it's been a quiet day where initial selling abated, but there was limited follow-through demand."

Denizbank taps bookrunners

For its planned deal, Turkey-based lender Denizbank has mandated Bank of America Merrill Lynch, Citigroup, HSBC and JPMorgan for a benchmark-sized bond offering and roadshow, a market source said.

The roadshow is expected to begin Wednesday in London and travel to Boston before wrapping up on June 20 in New York, Zurich and Geneva.

The Rule 144A and Regulation S transaction is expected to follow, subject to market conditions.

"That should be priced relative to the Finansbank AS deal," a trader said.

Tranka Kabel sets maturity

Also on Monday, Indonesia's Tranka Kabel set the tenor for its planned dollar-denominated issue of notes at five years, a market source said.

BNP Paribas and DBS Bank are the bookrunners for the Regulation S-only notes, which are non-callable for three years.

Proceeds will be used for the repayment of existing debt of about $135 million, as well as for funding the interest reserve account and for general corporate purposes.

The notes are guaranteed by PT Aluco, a copper and aluminum rod fabricator based in West Java, Indonesia.

San Antonio plans bonds

In another planned deal, Bermuda-based and Latin America-focused drilling and well services company San Antonio Internacional is looking to issue $500 million seven- to 10-year notes, a market source said.

Deutsche Bank, HSBC, Itau and Pareto Securities are the bookrunners for the deal, which will be marketed during a roadshow in Europe and the United States starting Tuesday.

Market-watchers were also whispering about possible forward momentum for the Ukraine's City of Kiev deal. In January the city announced plans for a $300 million offering of notes, and Credit Suisse was linked to the transaction.

"That seems odd, since the name has become highly illiquid at 250 bps wide to the sovereign," a trader said.

Abu Dhabi in focus

Monday also saw two Abu Dhabi-based issuers planning notes. "The region has a few deals on the stove now, with Dubai, IPIC and Dolphin," a trader said.

Dolphin Energy - which is 51%-owned by government-owned Mubadala Development Co. - will go on a roadshow for up to $1.93 billion of notes, a market source said.

RBS, BNP Paribas, Abu Dhabi Commercial Bank, Mitsubishi UFJ Securities and Societe Generale are the bookrunners for the Rule 144A and Regulation S bonds, which may be issued in bullet or amortizing form.

The investor meetings will take place in the United Arab Emirates, the United Kingdom and the United States.

"This is a nice, low-beta alternative to Dubai," a trader said.

And TDIC - which in April announced plans for a $1 billion issue in 2012 - has mandated RBS, HSBC and Standard Chartered for an issue of about $1 billion of notes, a market source said.

A roadshow is expected to take place at the end of June or in early July, and proceeds will be used for construction and other projects.

Mixed day for Middle East

Also from Abu Dhabi, the sovereign was "a little soggy" week over week, and Qatar credits were trading well," a trader said.

The 3.575% notes due 2016 from HSBC Bank Middle East that priced May 26 at par were trading Monday at 101.40 bid, 101.60 offered.

Meanwhile, names from Africa had a fairly lackluster session, a trader said.

"I did manage to trade some of my Nigeria 2021 dollar notes and Afrexim 2014 dollar notes," he said. "The majority of credits see their spreads struggling over the week."

Ukraine, Sberbank widen

In other trading on Monday, the new Ukraine 6¼% notes due 2016 that priced at par on June 10 were 20 bps wider, the London-based trader said.

Also on Monday the new 5.717% notes due 2021 that Russia's SB Capital SA, a unit of lender Sberbank, priced at par on June 9 were faring slightly better.

"They're only 5 bps wider, supported even in the absence of the local bid as Russia and Ukraine are out today," he said.

BTA lags, Turkey softens

Monday's secondary market also saw Kazakhstan's BTA Bank continue to lag, with more selling of the company's 2018 dollar notes ensuring they stay heavy, he said.

And looking to Turkey, the sovereign curve and corporates were softer on Monday in line with the market's increased risk aversion, a trader said.

"With the election finalized, one uncertainty is out of the way," he said. "From now on the focus will be on the economy and the [central bank] policy responses."

Overall on Monday, there appeared to be plenty of paper for sale, another trader said.

"It is not full scale bid-hitting or selling," he said. "Flows, for the most part, are quiet with a lot of the world on holiday. I've still got my powder dry, although it is getting easier to pick up paper. I still think some better entry points lie ahead."

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