Ukraine violence escalates; EM still has positive tone; Islamic Development roadshow ahead

By Christine Van Dusen

Atlanta, Feb. 18 - Emerging markets assets were fairly active in trading on Tuesday, despite the Monday holiday in the United States and increasingly violent protests in Ukraine.

"Clients were active yesterday, looking to add paper across Central and emerging Europe, Africa and the Middle East," a London-based analyst said. "The positive tone continues this morning."

Turkey's sovereign bonds opened mostly unchanged on Tuesday morning.

"Turkish corporates have performed well in recent days," she said. "Central and emerging Europe is trading better."

The recent issue of 4.291% notes due 2019 that Dubai Investments Park Development Co. priced at par to yield mid-swaps plus 265 basis points moved higher in trading on Tuesday, a London-based trader said.

"Many locals were out of the office late Thursday and Friday when there were European and international sellers," he said. "The bond reached 100¾ and closed wrapped around there."

In other trading from the Middle East, National Bank of Abu Dhabi's 2019s were less difficult to source on Tuesday, he said.

"In the last three to four sessions, some paper has come out," he said. "We traded it today at 100 5/8 in very decent size."

Looking to Ukraine, sovereign notes started the week slightly higher and seemed to benefit from the news that Russia would buy $2 billion of Ukrainian bonds, said Svitlana Rusakova of Dragon Capital.

But the escalating violence in Kiev, which reportedly led to some deaths on Tuesday, was expected to take its toll on the sovereign's bonds.

Also on Tuesday, Islamic Development Bank set a roadshow, Russia's OAO Sberbank revived plans for issuance and China's China Properties Group Ltd. and Shui On Land Ltd. looked at printing notes.

Kipco paper in demand

Paper from Kuwait Projects Co. (Kipco) was hard to find on Tuesday after the company released solid earnings results, the trader said.

"The 2020s were very tricky to source, so attention turned to Burgan Bank's 2020s," he said. "She has had a great little run-up 3¼ points from the days before the new 2019 Kipco printed. It was a superb value, but the rally has left it just OK."

On Tuesday Kipco's 2016s lagged, he said.

"It looks like a good value near the 114½ area again," he said. "We're also seeing demand for Kipco 2016s near 102½ and 102 5/8."

Demand was noted for Emaar Properties PJSC, following another ratings upgrade.

"Their 2019 bond is now 31 bps tighter on the month," he said.

Middle East in focus

Activity also was seen for Abu Dhabi Commercial Bank's 2023 notes, as well as for Emirates Islamic Bank's 2023s.

"Perpetuals today were a mixed bag," the trader said. "Qatar is very well supported, especially in the belly of the 2020s and 2022s. The 2040s and 2042s look like the only value on this curve, to my mind."

Qatar National Bank bonds were in demand, he said, and Dubai Holding's 2017 sterling notes were trading well at 105 bid, 105½ offered.

"Good interest in Dubai Electricity and Water Authority, with the 2018s and 2020s now 20 bps better on the month," he said.

Saudi lender sets roadshow

Islamic Development Bank will set out on Feb. 23 for a roadshow to market a dollar-denominated issue of Islamic bonds, a market source said.

CIMB, Commerzbank, First Gulf Bank, HSBC, Natixis, National Bank of Abu Dhabi and Standard Chartered Bank are the bookrunners for the Regulation S deal.

The issuer is a Jeddah, Saudi Arabia-based lender.

"I'd guess a new five-year to slot onto their curve," a trader said.

Sberbank revives deal

Russia's Sberbank revived plans for a benchmark-sized issue of dollar-denominated notes due in 10 years, setting talk in the 5 5/8% area, a market source said.

The notes will be due in February of 2024 and issued by SB Capital SA.

BofA Merrill Lynch, Credit Suisse, Deutsche Bank and Sberbank CIB are the bookrunners for the transaction.

"It's offering good value," the analyst said.

Last week the Moscow-based lender postponed the deal - which was expected to yield between 5.85% and 5.95% - due to market volatility.

China Properties plans issue

China Properties Group is looking to issue renminbi-denominated notes via bookrunner BofA Merrill Lynch, according to a company filing.

The proceeds from the Regulation S deal will be used for expansion strategies, refinancing and for general working capital purposes.

China Properties is a Hong Kong-based real estate developer focusing on large-scale residential and commercial projects in China's major cities.

Shui On Land plans notes

Shui On Land, through Shui On Development, plans to issue notes, according to a company filing.

BNP Paribas, Deutsche Bank, JPMorgan, Standard Chartered Bank and UBS are the bookrunners for the Regulation S deal.

The proceeds will be used to repay indebtedness and to fund capital expenditures.

Shui On Land is a Shanghai-based property developer.

© 2015 Prospect News.
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