New issue from Gazprom; EM spreads mixed; volumes muted; Transelec, Uruguay advance deals

By Christine Van Dusen

Atlanta, July 17 - Russia's OJSC Gazprom priced notes on an active Wednesday amid mixed spreads and summertime volumes for emerging markets assets as investors digested the latest comments from Federal Reserve Chairman Benjamin Bernanke.

"Another pretty active day," a trader said. "Skewed 58% to 42% to the buyers. Plenty of bonds on the squeezed list at the moment and we expect a few more additions, should the 10-year stay sub-2½%."

On Wednesday Bernanke said that the central bank's bond-buying program, designed to bolster the economy, is not on a "preset course."

"All focus today on Bernanke's testimony to Congress," a London-based analyst said. "US Treasuries are holding steady at 2.53% this morning while Asian stocks are relatively unchanged."

The Markit iTraxx SovX CEEME ex-EU index spread on Wednesday narrowed by 2 basis points to Treasuries plus 223 bps. The Markit iTraxx Crossover index spread - seen Tuesday at 425 bps - was unchanged on Wednesday morning.

"Spreads are a real mixed bag depending on what's on the big buy lists, the Street position and obviously the technicals," a London-based trader said.

Said the analyst, "A generally firm start to the day. Early buying of Turkish banks and corporates, although sovereign paper is 1/8 point to ¼ point down."

Corporate bonds from Latin America continued to move tighter on Wednesday, a New York-based trader.

"Volumes continue to be extremely muted, aside from a few credits in play," he said, pointing to names like Brazil's Vale SA.

"Customer inquiries also continue to be much lighter," he said. "Peruvian, Chilean and Colombian corporates have gone fairly quiet."

Lat-Am sovereigns tighten

Sovereign bonds from Latin America also tightened on Wednesday, another New York-based trader said.

"Spreads in higher-rated credits move in 7 bps to 12 bps," he said. "The price gaps we saw on the downside three weeks ago we are now seeing on the upside."

Venezuela notes move up

Bonds from Venezuela were up as much as 2½ points, with the sovereign's 2027s trading at 841/4.

"Hopes are that some of the supply concerns were overdone," a trader said.

In other news from Latin America, Chile-based electricity transmission company Transelec SA has mandated JPMorgan and Scotiabank to arrange a roadshow to market a possible issue of 10-year notes, a market source said.

A Rule 144A and Regulation S deal may follow, subject to market conditions.

And Uruguay is looking to print an issue of dollar-denominated notes in a Securities and Exchange Commission-registered deal, a market source said.

Gazprom prints notes

In its new deal, Moscow-based gas company Gazprom priced a €900 million issue of 3.7% notes due 2018 at par to yield 3.7%, a market source said.

The notes were talked at a yield in the 3¾% area.

BofA Merrill Lynch, Deutsche Bank, Gazprombank and JPMorgan were the bookrunners for the Regulation S deal.

Middle East in focus

In other trading on Wednesday, Qatar's 2042s were back at 110, a trader said.

"Perpetuals this week have also been a mixed bag, with Abu Dhabi Islamic Bank very popular, back to near 102," he said. "Dubai Islamic Bank is fairly popular, and traded at 99 today. And Emirates NBD is still feeling the least popular, in the low 93s still."

Flows were also mixed, he said.

"The Dubai sukuks continue to trade well, with the likes of Emaar Properties trading at 1071/2," he said. "Jebel Ali Free Zone is trading at 111½ and DPWorld 2017s at 110, seeing the Street scramble to cover shorts."

MAF notes climb

Majid al-Futtaim Holdings' 2019s moved back to 105 after trading as low as 101¼ in the last few weeks, the London trader said.

"We did see one or two nibbles on the worst-placed bond of the year, the Abu Dhabi Commercial Bank 2023s," he said. "I still maintain its good value versus the 2023s and did see some looking at this one."

Some cash found its way into Abu Dhabi Commercial Bank's (TAQA) curve, given that its 2013s will mature in two weeks, he said.

"The squeeze continues on National Bank of Abu Dhabi's 2015s," he said. "They're 40 bps tighter on the month now."

Lebanon, Nigeria get attention

Lebanon "has been catching a sneaky bid the past few sessions," a trader said.

And Nigeria's recent issue of notes due in 2018 on Wednesday were 60 bps tighter on the week, he said.

The Rule 144A and Regulation S notes priced at 98.917 to yield 5 3/8% via Citigroup and Deutsche Bank.

Ukraine notes strengthen

Sovereign bonds from Ukraine have strengthened so far this week, said Svitlana Rusakova of Dragon Capital.

"Price action was quite uneven, however," she said. "Corporates were marked a ½ point higher on average."

Naspers prints tap

On Tuesday, South Africa-based mass media company Naspers Ltd. priced a $250 million add-on to its 6% notes due 2020 at 101 to yield Treasuries plus 387.20 bps, a market source said.

The original $750 million issue of 6% notes due in 2020 priced at par to yield 6%.

Barclays, Citigroup (active) and JPMorgan (passive) were the bookrunners for the Rule 144A and Regulation S deal, issued through indirect wholly owned subsidiary MIH BV.

The proceeds will be used for general corporate purposes, including future acquisitions and the repayment of outstanding debt, according to a company announcement.

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