Shinhan Bank prints notes amid lighter trading activity; Russia, South Africa bonds active

By Christine Van Dusen

Atlanta, Jan. 18 - South Korea's Shinhan Bank sold notes on a Wednesday that saw lower volumes but slightly tighter spreads and a willingness among emerging markets investors to take on some risk.

"Activity is still light, but the marginal activity is still to add risk," a London-based trader said.

Bonds from Russia remained popular, he said, while Ukraine continued to lag.

"There's no interest to trade Ukraine unless you're forced to," he said.

The Markit iTraxx SovX index spread started the day 2 basis points tighter.

"There's very strong demand from Asia, giving a bid to all things Russia and South Africa, but South Africa's 2024s still can't quite make it back to reoffer," he said.

Other names from Africa were ticking along, according to another trader, including African Import-Export Bank, Nigeria, Namibia and Egypt's 2020 notes. They were trading Wednesday at 86 bid, 89 offered.

In its new deal, South Korea-based lender Shinhan Bank priced $700 million 4 3/8% notes due July 27, 2017 at 99.681 to yield 4.441%, or Treasuries plus 365 bps, a market source said.

Bank of America Merrill Lynch, BNP Paribas, Deutsche Bank, HSBC and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

And Mexico-based bakery and food company Grupo Bimbo SAB de CV launched an $800 million issue of notes due 2022 to yield Treasuries plus 270 bps, a market source said.

BBVA, Citigroup and Santander are the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for debt refinancing and general corporate purposes.

Pemex prices bonds

This news followed the late-Tuesday pricing of Mexico-based petrochemical company Petroleos Mexicanos SAB de CV's $2 billion issue of 4 7/8% notes due Jan. 24, 2022.

The Pemex notes came to the market at 99.119 to yield Treasuries plus 315 bps via Bank of America Merrill Lynch, Citigroup and HSBC in a Rule 144A and Regulation S transaction.

"Pemex shows who's boss," the London-based trader said. "It's a reminder of the premium that Latin American risk enjoys right now. But the success of the deal helps the mood for EM in general, despite the best efforts of the World Bank to talk it down."

The deal attracted $5.5 billion in orders, a market source said.

Itau Unibanco does deal

Also pricing late Tuesday was Brazil-based finance and insurance company Itau Unibanco Holding SA's $500 million tap of its 6.2% notes due Dec. 21, 2021.

The deal came to the market at 101.471 - after being talked in the par area - to yield 6%.

Bank of America Merrill Lynch, Itau BBA and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for general corporate purposes.

The final book was about $4 billion with 270 accounts involved, a market source said.

JBS, Camposol on roadshows

In other deal-related news from Brazil, JBS USA LLC and JBS USA Finance Inc. - units of JBS SA - are on a roadshow for a $400 million issue of eight-year senior notes, a market source said.

JPMorgan, BB Securities, Bradesco BBI, Rabobank, Santander and Wells Fargo are the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for three years.

Pricing is expected to take place next week.

The proceeds will be used to repay debt at JBS, a Sao Paulo-based processor of beef, pork and lamb.

And Peru-based vegetable and fruit grower and exporter Camposol SA is on a roadshow for a dollar-denominated offering of notes, a market source said.

Credit Suisse and Santander are arranging the marketing trip, which began Wednesday and travels to Lima, Santiago, Miami, Switzerland, New York, London and Boston before concluding on Jan. 25 in Los Angeles.

The notes will be distributed under Rule 144A and Regulation S.

Turkey sets initial talk

Turkey set initial price talk for its planned issue of dollar-denominated benchmark-sized notes due September 2022 at 6.35% to 6.45%, a market source said.

Barclays Capital, Citigroup and JPMorgan are the bookrunners for the Securities and Exchange Commission-registered deal.

"The Turkey sovereign is almost trading by appointment," the London trader said. "Retail investors still love bank names."

Also getting attention in Turkey were bonds from conglomerate Calik Holding AS.

"The recent weakness in Calik's 2012s suggests they may look to sneak in a last-minute debt extension," he said. "The bonds are offered at a 25% yield to March 5. Given that 'voluntary' exchanges seem to be in vogue right now, anything is possible."

BTA trades up

Looking to Kazakhstan, lender BTA Bank remained in focus after the company announced its default.

"BTA actually traded up 1½ points to 17 yesterday as their default was confirmed," the London trader said. "Go figure."

By the European afternoon on Wednesday, the lender's 2018s were seen at 16.5.

From the Middle East, Qatar caught traders' attention on Wednesday.

"Qatar continues to surprise and is still trading very heavy," a trader said.

Said another trader, "Qatar's 2022s are 20 bps wider on the month."

Middle East in focus

Bonds from Dubai traded well. "Although late in the day it did feel like some Dubai Water and Electricity Authority paper might have come out," a trader said.

Emirates' 2016s were popular with retail investors, trading just under par.

"Abu Dhabi National Energy Co.'s 2014s and 2017s continue to see demand," he said. "International Petroleum Investment Co., while overall 15 to 20 bps wider on the week, is actually seeing some balanced flow at these levels."

Bahrain's 2014s were marked lower, but the recent 2018s were "a rock," a trader said. They were "a mere 10 bps wider on the month. Bahrain has outperformed Qatar and Abu Dhabi as of late. Meanwhile I traded Lebanon's 2026s at 100.10 on Nov. 30, and they closed at 102.75 bid, 103.25 offered today. This credit remains a rock."

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