Unit of Brazil's CSN prices add-on; Gazprom, Turkish banks active; MAF Sukuk deal on tap

By Christine Van Dusen

Atlanta, Jan. 30 - A unit of Brazil-based steel firm Companhia Siderurgica Nacional priced notes on a Monday that saw emerging markets assets start off slowly and sluggishly and pick up some steam by the session's end, with a focus on Russia-based Gazprom and Turkey's banks.

"Credit's not feeling quite so euphoric today as Portugal's ongoing demise, a lack of clarity on [Greece] and some month-end caution after the massive January rally combine to send spreads 10 basis points wider," a London-based trader said on Monday morning.

Russia's Gazprom was among the more active names early in the session.

"Interest from cross-over money has created a 5 bps outperformance versus the sovereign," he said.

The late-day buying of Ukraine bonds on Friday was offset on Monday by comments that the sovereign is going to take a hard line in its gas negotiations.

"So spreads are now 15 bps wider," he said. "No bonds are trading at the wider levels."

Turkey's banks continued to outperform, he said.

"They still amaze, with just relentless demand, aside from Garanti Bankasi AS," he said.

Meanwhile, interest in Russia's corporate names was limited to the Vimpelcom curve.

"That sees amazing interest versus its peer group," he said. "It's 150 bps tighter, month over month, and still strong."

By the end of the European trading day, activity was moderately busy and flows were fairly balanced, another trader said.

"It was a mixed bag, but definitely a little profit-taking after a good squeeze on some names," a trader said. There was "a flurry of activity early afternoon as bids were hit on Abu Dhabi National Energy Co., Qatar and some Dubai names. But net-net, some bids are creeping back in as the day draws to a close."

The Markit iTraxx SovX index spread closed at about 313 bps over Treasuries, from an earlier wide of 318 bps.

"We tried to move wider, intra-day, but with equity markets stabilizing we have closed out very firm," a trader said.

CSN prints notes

In its new deal, CSN Resources SA - a unit of Brazil-based steel firm Companhia Siderurgica Nacional - priced a $200 million tap of 6½% notes due July 21, 2020 at 106 to yield 5.6%, according to a company announcement.

Proceeds will be used to repay short-term debt, to extend the company's debt maturity profile and for general corporate purposes.

In other deal-related news, Mexico-based homebuilder Desarrolladora Homex SAB de CV has mandated Credit Suisse and Deutsche Bank for a roadshow starting Tuesday, a market source said.

The marketing trip will begin in Los Angeles and London and conclude on Feb. 1 in New York and Boston.

A Rule 144A and Regulation S issue of dollar-denominated notes may follow, pending market conditions.

Brasil Telecom plans roadshow

And Brasil Telecom SA - a subsidiary of Rio de Janeiro-based telecommunications company Telemar Norte Leste SA - is planning a roadshow for an issue of dollar-denominated notes from Feb. 1 to Feb. 3, a market source said.

The marketing trip will begin in New York and travel to Los Angeles before wrapping up in Boston and Los Angeles.

Bank of America Merrill Lynch, Barclays Capital, Espirito Santo Investment Bank and HSBC are the bookrunners for the Rule 144A and Regulation S deal.

IPIC takes a hit

In trading on Monday, bonds from the Middle East and North Africa saw some selling during the European morning, a trader said, with International Petroleum Investment Co. taking a bit of a hit after a solid run the previous week.

"It's still a very fickle, flaky market," he said. "Offers are coming out of the woodwork on Aldar Properties, Dolphin Energy and now Dubai Water Electricity Authority and Dubai."

Some buyers were seen for Emaar Properties' 2016s, he said, and DP World's 2017s were holding well.

MAF Sukuk sets talk

Also from the Middle East, MAF Sukuk Ltd. - a unit of Dubai-based developer Majid Al-Futtaim Holding - set price talk at 5.9% to 5.95% for its planned issue of benchmark-sized dollar-denominated notes due February 2017, a market source said.

Abu Dhabi Islamic Bank, Dubai Islamic Bank, HSBC and Standard Chartered are the bookrunners for the Regulation S deal, which is expected to price on Tuesday.

"The talk remains a shade under 6%," a trader said. "The deal has been trying to come for a while now, originally in the conventional format and ultimately they've taken the signpost at the fork in the road labeled 'sukuk.' Granted, this will give sukuk funds and players something a little different from the stock-standard financials, and the yield looks OK, slotting in between Emaar and the likes of Emirates."

The deal should be a good test of the market, he said.

"There has not been a massive amount of 2012 yet," he said.

Kazakhstan plans bonds

Looking to Kazakhstan, embattled BTA Bank - which faces a second restructuring - opened between 18 and 20, he said.

"That's impressive, given Friday's dire presentation to creditors," he said.

In other news from Kazakhstan, the sovereign is looking to issue dollar-denominated bonds sometime this year, a market source said.

The bonds could be conventional or a sukuk issue.

Market sources were also whispering about a possible issue of €500 million to €1 billion of notes from Bulgaria.

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