Alpek prices bonds; EM investors worry about global economy; volumes thin, spreads widen

By Christine Van Dusen

Atlanta, Nov. 15 - Mexico's Alpek SAB de CV sold notes on a Thursday that saw emerging markets assets start off in a defensive posture as investors continued to worry about the United States' impending fiscal cliff and the ongoing financial crisis in Greece.

Most bids were about a 1/4-point off their London closing levels, an analyst said.

Early in the day, corporate spreads widened by less than 2 basis points while the Markit iTraxx SovX index spread managed to tighten by about 1 bp. By day's end, most names were wider.

"Markets continue slowly to price in the 'fiscal cliff' risks," Barclays said in a report. "President Obama's press conference suggests a significant gap remains between Republicans and Democrats on key issues, reducing the likelihood for a compromise in the eyes of the market. A cautious view on risky assets remains warranted until cliff risks have been successfully dealt with."

Volumes were thin while volatility was low.

"This has been thanks to ample liquidity and policy puts provided by major central banks," the report said.

Said a trader, "Retail activity overall was fairly balanced, flow-wise, however I remain a little wary. We can push wider due to a lot of local accounts having probably closed off secondary investments for the year, due to upcoming supply and due to simply the market we are in."

On a spread basis, some names are approaching some appealing levels, he said.

"However, there was no real liquidity around today to really test the Street positions and appetite," he said.

Alpek prints notes

In its new deal, Mexican petrochemical company Alpek priced a $650 million issue of 4½% notes due 2022 at 99.713 to yield 4.536%, or Treasuries plus 295 bps, a market source said.

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

"That puts it about 10 wide to MXCHF 22s," a New York-based trader said. "That's a little too tight, in my opinion."

Prior to pricing, the notes were trading up a 1/4-point on the bid side in the gray market.

Indonesia does deal

This followed the late-Wednesday pricing of notes from the Republic of Indonesia through special-purpose vehicle Perusahaan Penerbit SBSN Indonesia III. The sovereign sold $1 billion 3.3% Islamic bonds due Nov. 21, 2022 at par to yield 3.3%, a market source said.

The Rule 144A and Regulation S notes - via Deutsche Bank, HSBC and Standard Chartered - were talked in the 3.35% area.

Turkish banks in focus

From Turkey, Yapi Kredi's bonds outperformed the sector, following solid third-quarter results, the London analyst said. The company's 2017s were a particular standout during the session.

"Light dealer inventories and decent demand has pushed the prices 2½ points higher on the week," she said. "Yapi's 2017s continue to be one of our top picks."

Meanwhile, Isbank released third-quarter numbers that came in above consensus, she said.

"We remain constructive on the credit," she said. "We continue to see value in Isbank's sub 2022s."

Efes releases results

In other news from Turkey, Istanbul-based beverage company Anadolu Efes Biracilik Ve Malt San - which recently sold $500 million 3 3/8% notes due 2022 to yield Treasuries plus 175 bps - released lower-than-expected third-quarter results.

"We view the results as marginally disappointing," she said. "We remain comfortable with Efes' credit metrics but view spreads as fair value at a 15 bps premium over the Turkish sovereign."

ADIB gets attention

Much of the day's trading activity was focused on the recent issue of $1 billion 6 3/8% perpetual Islamic bonds that Abu Dhabi Islamic Bank priced at par.

"Bonds were marked ¼ of a point lower," a trader said. "There was some two-way activity around, however."

Abu Dhabi Islamic Bank, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S-only sukuk.

Middle East corporates active

Also from the Middle East, Dolphin Energy's 2019s were trading on Thursday at 113 bid, 113¾ offered, while the company's 2021s were seen at 116 bid, 116¾ offered.

Saudi Electricity Co.'s 2017s were quoted at 103 bid, 103.6 offered. The corporate's 2022s traded at 108.4 bid, 108.7 offered.

Abu Dhabi National Energy Co. (TAQA) - which plans to price new dollar notes by the end of the year - saw its existing 2013 dollar bonds trade at 103.6 bid, 103.95 offered. The company's longer-dated bond, due in 2036, traded Thursday at 131 bid, 132 offered.

BNP Paribas, Citigroup, HSBC, National Bank of Abu Dhabi and Standard Chartered are the bookrunners for the upcoming issue of dollar notes.

Ukraine bonds firm

In trading from Ukraine, eurobonds have been "quite firm," said Svitlana Rusakova of Dragon Capital.

The sovereign's 2017s have traded up a few times, quoted at 106¾ bid, 107½ offered. The 2020s were seen at 102½ bid, 103½ offered. And the 2021s were sighted at 103½ bid, 104½ offered.

On the corporate side, Metinvest's 2015s traded at 101¼ bid, 102¼ offered and its 2018s moved up to 94½ bid, 95½ offered.

Serbia notes attract orders

The final book for the Republic of Serbia's recent $750 million issue of 5¼% notes due Nov. 21, 2017 was $3.75 billion, a market source said.

The notes priced at 99.135 to yield 5.45%, or Treasuries plus 482.5 bps, via Deutsche Bank, HSBC and VTB Capital in a Rule 144A and Regulation S deal.

About 60% of the orders came from the United States, 21% from Europe and 19% from the United Kingdom.

Funds accounted for 92%, banks and private banks 5% and others 3%.

The notes opened Thursday at 101.

Icici deal oversubscribed

Also oversubscribed was India-based Icici Bank Ltd.'s RMB 500 million add-on to its existing 4.9% notes due Sept. 21, 2015.

The notes priced Wednesday at 100.625 to yield 4.66% with HSBC and Standard Chartered Bank in a Regulation S transaction.

The deal attracted more than RMB 1.9 billion in orders from more than 70 investors, a market source said.

About 56% came from Hong Kong, 31% from Singapore, 5% from Taiwan and 8% from Europe.

Funds picked up 71%, private banks 12%, banks 11%, insurance 3%, corporates 2% and others 1%.

The original issue totaled RMB 500 million and priced at par.

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