Indonesia prices bonds as EM remains in demand; Turkish, Russian corporates trade up

By Christine Van Dusen

Atlanta, April 27 - Indonesia sold notes on a Wednesday that, while somewhat quiet, was fairly strong for emerging markets assets and saw renewed risk appetite among investors.

Several other issuers - including Kazakhstan's JSC Kazkommertsbank, Celulosa Argentina SA, Colombia's Bancolombia SA and Russia's VTB Bank - continued moving toward the market.

"Continued weakness of the U.S. dollar drove further EM gains," according to a report from RBC Capital Markets.

Said a market source: "Emerging markets remain in demand, but as with yesterday it's not enough to generate any actual spread tightening. Activity will remain muted all week, but there is still some liquidity."

He pointed to Russia and its banking sector, as well as the Turkey sovereign, Abu Dhabi and Dubai.

"For a supposedly quiet day, there's plenty going on," a London-based market source said. "The main theme is a massive interest to buy risk by real money accounts - the most demand we've had in two weeks."

That demand is spread across a wide variety of names, he said, with Belarus among the few laggards.

Indonesia does deal

In its new deal, Indonesia priced $2.5 billion 4 7/8% notes due May 5, 2021 at 98.254 to yield 5.1%, a market source said.

Deutsche Bank, JPMorgan and UBS were the bookrunners for the Rule 144A and Regulation S deal.

Also on Wednesday, Kazakhstan-based lender Kazkommertsbank mandated JPMorgan and UBS for a dollar-denominated issue of notes with an intermediate maturity.

The Rule 144A and Regulation S issue is expected to launch following a roadshow that begins May 2 and will travel to New York, the U.S. West Coast and London.

The company canceled plans in November for a similar issue of notes, which carried a seven-year tenor and was whispered to yield in the high 9% area.

"They're trying again for a new dollar deal," a market source said. "Since they failed to get a deal away back in November, their curve has mysteriously rallied 250 bps. So it will be fascinating to see investor reaction now."

The Kazakhstan banking sector has been mostly quiet as of late, with just JSC Halyk Bank doing a deal in January for $500 million 7¼% notes due 2021, which priced at 98.263 to yield 7½%.

Fosun on roadshow

Wednesday also saw China-based business conglomerate Fosun International Ltd. set out on a roadshow for its planned benchmark-sized issue of dollar-denominated notes.

Goldman Sachs, Standard Chartered Bank and UBS are the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for general corporate purposes, to repay existing debt and to repay a bridge loan from Standard Chartered Bank.

Also from China, oil company MIE Holdings Corp. set the tenor for its planned dollar-denominated issue of senior notes at five years, a market source said.

Merrill Lynch and Deutsche Bank are the bookrunners for the Rule 144A and Regulation S transaction.

The deal is being marketed on a roadshow that began April 27 in Hong Kong and will travel to Singapore, the United States and London before wrapping up on May 6.

Celulosa, others on tap

From Latin America, paper and pulp company Celulosa Argentina is planning to issue up to $150 million of seven-year bonds, a market source said.

Citigroup and Credit Suisse are the bookrunners for the deal, which is expected to launch in June or July.

And Colombia-based lender Bancolombia set the tenor at up to 10 years for its planned issue of up to $1 billion of bonds, a market source said.

In another upcoming deal, Russia-based lender VTB Bank is expected to issue sukuk notes worth about $250 million, a market source said.

No other details were immediately available on Wednesday.

Corporates see light activity

In trading, Turkey's sovereign curve opened firmer, and light activity was seen for the country's corporate issuers. A trader noted better buying of Yasar Holding AS' 2015 notes and Turkey's Turkiye Garanti Bankasi AS (GarantiBank)'s 2021 notes.

The GarantiBank 2021s - $500 million 6¼% notes due 2021 that came to market April 14 at 98.086 to yield 6 3/8% - were trading Wednesday at 99.50 bid, 99.75 offered.

From Russia, private lender Alfa Bank's 2021 notes saw retail demand on Wednesday. The notes were seen at 100.80 bid, 101.00 offered after pricing on April 19 at par.

"The sector is very firm," a trader said. "Promsvyazbank's 2014s are also having good support as well. We are left better sellers of both names."

Buying was seen for CJSC Tinkoff Credit Systems Bank's 2014 notes, which came to market on April 14 at par to yield 11½%. The notes were trading Wednesday at 100.35 bid, 100.85 offered.

"The streets of Moscow are paved in gold today," the trader said. "Even the new Evraz Group SA 2018s are seeing demand."

Those notes - which priced April 19 at par to yield 6¾% - were seen at 116 bid, 116.50 offered on Wednesday.

Middle East mixed

Looking to the Middle East and Africa, Kuwait's Burgan Bank SAK reported a first-quarter gain in profits, but its 2020 notes remained fairly illiquid on Wednesday, a market source said.

"We traded both sides in the low 106s during the week before last, with high 6% yields," a market source said.

The 7 7/8% notes priced in September at 98.311 to yield 8 1/8%.

"Dubai's 2020s are holding above the 102 cash price at the highest levels since October," a trader said.

And Abu Dhabi-based investment vehicle Mubadala Development Co. PJSC's 2021 notes were seen trading at 100.70 bid, 100.90 offered after pricing on April 13 at 99.484 to yield Treasuries plus 210 bps.

"Egypt and Bahrain feel soggy here, failing to muster gains. It feels like there's some paper around. South Africa is flying," he said. "Liquidity remains fairly low overall for the most part, and it's still feeling tricky to find some bonds on the technical names. It's virtually the last trading day of the month tomorrow, with London out on Friday."

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