Poland, Banco do Brasil sell bonds on 'constructive' day for EM; Qatar Islamic sets talk

By Christine Van Dusen

Atlanta, Oct. 2 - Poland and Banco do Brasil SA printed notes on a supportive Tuesday for risky assets as moves by the Federal Reserve and central banks helped calm investors' concerns about the global economy.

"Over the past 24 hours we have observed two constructive developments for markets: hints of further US Treasury purchases by the Fed and more central bank easing with a 25-basis point cut by the Reserve Bank of Australia," according to a report from Barclays. "Markets are retaining the constructive tone that followed yesterday's US [manufacturing] report."

In Fed Chairman Benjamin Bernanke's speech on Monday he suggested that the purchases of long-term Treasury securities could continue beyond the end of the year.

"The measured response in financial markets to weak data on global manufacturing and trade suggests to us that investors have been reassured by the strengthened 'policy puts' in Europe and the United States and that expectations for the recovery have been ratcheted down enough to mitigate the risk of disappointed and anxious reactions," Barclays said. "We continue to expect a supportive environment for risk assets."

In its new deal, Poland priced a €1.75 billion issue of 3 3/8% notes due July 9, 2024 at par to yield 3 3/8%, or mid-swaps plus 143 bps, a market source said.

The notes priced in line with talk, set at the mid-swaps plus 145 bps area.

Commerzbank, HSBC, ING and Societe Generale were the bookrunners for the Regulation S deal.

Poland notes attract orders

At midday on Tuesday, the books for Poland's new issue were more than €3.3 billion with 225 accounts involved. The final book was €3.5 billion from 245 accounts.

About 29% of the bonds were allocated to investors from Germany and Austria, 18% to the United Kingdom and Ireland, 16% to Benelux nations, 13% to France and 8% to Poland.

Asset managers snapped up 47%, pension funds and insurance companies 33% and banks 16%, according to a statement from Poland's Ministry of Finance.

Banco do Brasil does deal

In another new deal on Tuesday, Banco do Brasil priced a $1.75 billion issue of 3 7/8% notes due Oct. 10, 2017 at 98.978 to yield 4%, a market source said.

The notes were talked at a yield in the 4 3/8% area.

BB Securities, BNP Paribas, Bradesco BBI, BTG Pactual, Citigroup and JPMorgan were the bookrunners for the Securities and Exchange Commission-registered deal.

Proceeds will be used for general banking purposes.

Lenders set price talk

In other deal-related news, Doha-based Qatar Islamic Bank SAQ set price talk at the mid-swaps plus 190 bps area for its planned five-year issue of benchmark-sized dollar notes, a market source said.

Deutsche Bank, HSBC, Qinvest and Standard Chartered are the bookrunners for the Regulation S sukuk, which are set to price on Wednesday.

And Moscow-based lender JSC Russian Standard Bank set initial talk at the high-10% area for its planned issue of 51/2-year dollar-denominated notes, a market source said.

Goldman Sachs, UBS and VTB Capital are the bookrunners for the Rule 144A and Regulation S deal, which is expected to price this week.

First Gulf notes active

The new $650 million issue of 2.862% notes due 2017 from Abu Dhabi's First Gulf Bank PJSC was busy in trading on Tuesday.

The notes, which priced Monday at par, started the day at 100.05 bid, 100.25 offered.

As the European morning went on, the notes traded at 100.10 bid, 100.30 offered and then were sighted at 100.20 bid, 10.35 offered.

"Finding a level here," a trader said.

The notes closed at 100.27 bid, 100.37 offered.

"Bond has done well," he said. "The bulk of the action was at the 100.30 level ... I'd suggest, not surprisingly, the lowest coupon achieved by First Gulf Bank."

First Gulf Bank's deal attracted more than $2.7 billion from 190 orders, with 57% from the Middle East and North Africa, 27% from Europe, 13% from Asia and 3% from the United States.

Banks picked up 40%, funds 36%, private banks 15% and central banks 9%.

Citigroup, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered were the bookrunners for the Regulation S deal

Czech notes in demand

Also garnering attention on Tuesday was the new €750 million add-on to the Czech Republic's 2 7/8% notes due 2022.

The notes priced at 108.333 to yield mid-swaps plus 116 bps with Barclays, Erste Group, Societe Generale and Unicredit in a Regulation S-only deal.

The original €2 billion issue priced in February at 99.169 to yield 3.977%, or mid-swaps plus 160 bps.

"The final book was in excess of €1.6 billion," according to Erste Group.

DEWA tightens

In other trading on Tuesday, Dubai Electricity and Water Authority (DEWA)'s 2020s opened at 112.40 bid, 113.25 offered before moving to 116.75 bid, 117.25 offered on news that the utility will raise 4.5 billion dirhams in 2013.

"That's 4 bps tighter on the week," a trader said.

And Ras al Khaimah's 2014s were trading at 110.35 bid, 111.25 offered, while its 2016s were quoted at 108.75 bid, 109.75 offered.

"Not too liquid, but steady," he said.

African bonds see support

From Africa, bonds from names like African Export-Import Bank were well supported in trading on Tuesday.

"Does feel a little paper around on some sovereigns at the moment, with Ghana trading a few times and Gabon offers around," a trader said. "On the flip side Angola, Egypt and Afrexim are well supported again."

And South Africa's five-year credit default swaps closed at 141 bid, 144 offered.

PDVSA liquid

A trader said bonds of Petroleos de Venezuela SA (PDVSA) remained liquid Tuesday as the sovereign's election neared.

About $70 million of the 9¾% notes due 2035 changed hands, he said, seeing the issue fall a point to 843/4. The 8½% notes due 2017 were down more than 1½ points at 89 3/8, on about $40 million traded.

Another "$20-odd million" of the 9% notes due 2021 turned over, down more than a point to 843/4.

A regime change in the country - currently headed by Hugo Chavez - could mean big changes for PDVSA, which is responsible for propping up many of the country's social programs. The opposition, however, wants to take the political aspect of the company out of the equation and also intends to attempt to rework supply contracts with allies such as China.

Last year, PDVSA exported about half of its crude oil out of the country. In many cases, the oil was paid for not in cash, but with goods or services. This, combined with the company's social program responsibilities, have been a drain on cash flow.

Stephanie Rotondo contributed to this report.

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