Slovak Republic, First Gulf Bank unit sell bonds on cautious, mixed day for EM assets

By Christine Van Dusen

Atlanta, Jan. 11 - The Slovak Republic and a unit of First Gulf Bank priced notes while investors showed continued caution on a moderately active Wednesday for emerging markets assets.

"Considering it's the start of the year, activity and interest - while better than last week - still remains below what many people would be hoping for," a London-based trader said. "Today, so far, sees a now-familiar cautious start."

Most bonds from Russia managed to perform nonetheless.

"Russian locals returned from holiday in earnest yesterday and stamped their mark on all Russian assets, which are typically 15 basis points tighter, helped by a similarly marked increase in the level of retail investor interest in Russian names," he said. "All things Russia continue to enjoy a great bid."

Gazprom and VTB were among the star performers, he said.

"And of course Vimpelcom is still rallying," he said, pointing to the news that the mobile phone company is selling a majority stake to Algeria.

Meanwhile, Ukraine lagged.

"The long end of the curve there is still very heavy and seeing the least interest from clients," he said.

Also underperforming on Wednesday was South Africa's recent issue of $1.5 billion 4.665% notes due 2024, which priced at par to yield Treasuries plus 270 bps via Barclays Capital and Citigroup in a Securities and Exchange Commission-registered deal.

"At least they got the deal done," a trader said. "But none of the many people who came in to hit us could be described as typical South Africa investors. So it's not surprising the deal remains down a half-point."

Dubai bonds see support

From the Middle East, Dubai's sovereign bonds were well supported while some heavy action was seen for Abu Dhabi's International Petroleum Investment Co., Abu Dhabi National Energy Co. and Qatar paper, a trader said.

"Even Abu Dhabi's 2019s have cheapened up and likewise the 2014s," he said. "Emirates' 2016s hold well and Dubai Water and Electricity Authority's 2020s were lifted above 103."

The final book for Dubai-based EIB Sukuk Co. Ltd.'s $500 million issue of 4.718% sukuk notes due Jan. 18, 2017 was $1.5 billion from 106 accounts, a market source said.

The deal priced at par to yield 4.718%, or mid-swaps plus 350 bps, via Citigroup, Emirates NBC Capital Ltd., HSBC, National Bank of Abu Dhabi, RBS and Standard Chartered Bank.

About 57% of the orders came from the Middle East, 29% from Asia and 14% from Europe. Banks accounted for 61%, fund managers 24%, pensions and insurers 9%, private banks 5% and others 1%.

"That reached 100.125 bid, 100.15 offered and faded to trade down at 99.90 mid-afternoon," a trader said. "So new issues from this space are not exactly setting the world on fire."

First Gulf Bank prints notes

In its new deal, Abu Dhabi's FGB Sukuk Co. Ltd. priced $500 million notes due Jan. 18, 2017 at par to yield 4.046%, or mid-swaps plus 287.5 bps, a market source said.

The notes priced in line with talk, set at mid-swaps plus 287.5 bps.

"FGB got their new five-year sukuk away, which closes up 15 cents versus reoffer," a trader said early in the day.

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

"The five-year sukuk came 25 bps cheap to the curve like South Africa but is trading better than South Africa, holding just above par," another trader said near the end of the day.

Slovakia prices bonds

The Slovak Republic priced a €1 billion issue of 4 5/8% notes due Jan. 19, 2017 at 99.69 to yield 4.696%, or mid-swaps plus 305 bps, a market source said.

The notes priced at the low end of talk, set at mid-swaps plus 305 bps to 315 bps.

HSBC, Societe Generale, Tatra Banka and Unicredit were the bookrunners for the Regulation S deal.

And Brazil-based lender Banco do Brasil SA set the size for its planned issue of dollar-denominated perpetual notes at benchmark, a market source said.

BB Securities, BNP Paribas, Citigroup, HSBC and Standard Chartered Bank are the bookrunners for the Rule144A and Regulation S offering, which is expected to price as soon as this week.

Kexim, Korea Gas push deals

Wednesday also saw South Korea-based lender Export-Import Bank of Korea (Kexim) mandate Credit Suisse and UBS as joint bookrunners for an offering of Swiss franc-denominated notes, a market source said.

No other details were immediately available on Wednesday.

And South Korea-based natural gas company Korea Gas Corp. set initial price talk at the Treasuries plus 362.5 bps area for its planned dollar-denominated benchmark-sized issue of 30-year notes, a market source said.

JPMorgan, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS are the bookrunners for the Rule 144A and Regulation S deal.

Colombia prices tap

This news followed the late-Tuesday pricing of Colombia's $1.5 billion tap of its 6 1/8% notes due Jan. 18, 2041. The deal came to the market at 117.738 to yield 3.014%, or Treasuries plus 195 bps, according to a filing from the sovereign.

The notes priced in line with talk, which was set at the Treasuries plus 195 bps area.

HSBC and JPMorgan were the bookrunners for the SEC-registered notes, which include a make-whole call at Treasuries plus 25 bps.

Proceeds will be used for liability management transactions and for 2012 budgetary expenditures.

The original issue totaled $1 billion and priced on Oct. 20, 2009.

Hutchison Whampoa does deal

Also on Tuesday, Hong Kong-based business conglomerate Hutchison Whampoa Ltd. priced a two-tranche $1.5 billion issue of notes due 2017 and 2022, a market source said.

Goldman Sachs, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The deal included $500 million 3½% notes due Jan. 13, 2017 that came to the market at 99.519 to yield Treasuries plus 275 bps and $1 billion notes due Jan. 13, 2022 that priced at a spread of Treasuries plus 275 bps.

And Singapore-based engineering company United Engineers Ltd. priced S$125 million notes due Jan. 26, 2017 at par to yield 4.2%, a market source said.

HSBC and OCBC were the bookrunners for the deal.

BTA Bank still in focus

Controversy continued to swirl around Kazakhstan-based BTA Bank, which by Wednesday morning still had not paid its coupon and was looking at a second restructuring.

"The debate still rages," a trader said. "Will they pay [the coupon]? What happens next? Where to be positioned? For now we just have [Kazakhstan's] Alliance Bank confirming they have no desire to restructure and continue to discuss a deal with [the European Bank for Reconstruction and Development]."

By afternoon, the lender confirmed that its pending coupon will not be paid.

"So expect a new restructuring proposal in February," another trader said. "BTA's 2018s are down to between 17.5 and 19.5."

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