Indian Oil, Transelec, Aeromexico, Banyan Tree bring primary back to life; volumes stay light

By Christine Van Dusen

Atlanta, July 23 - Indian Oil Corp., Chile's Transelec SA, Grupo Aeromexico SAB de CV and

Singapore's Banyan Tree Holdings Ltd. sold notes on Tuesday as primary market activity picked up, spreads narrowed and trading volumes remained thin.

The Markit iTraxx SovX CEEME ex-EU index spread on Tuesday tightened 4 basis points to Treasuries plus 208 bps, while the Markit iTraxx Crossover index spread - seen Monday at 394 bps - moved to 387 bps over Treasuries.

"With US Treasuries remaining steady in the 2.46% to 2½% range, we still expect more issuers to come to the market soon," a London-based analyst said.

By the European close, Treasury yields were closer to 2.51%, making the market a bit defensive, a London-based trader said.

"That put cash prices on the back foot," the London trader said. "The market has perhaps, again, got a little complacent in adding risk over the past week."

And new supply from emerging markets saw some names come under pressure, he said, including Abu Dhabi National Energy Co. (TAQA) and Dolphin Energy.

"The bank buyers have been back in force the past few weeks, and it's been tricky sourcing paper, so some supply would be welcome from some of the banks," he said. "I suspect that may be one for after the summer and Ramadan lull."

The analyst was keeping an eye on South African electricity provider Eskom Holdings SOC Ltd., which is on a roadshow until Friday for a dollar-denominated issue of notes.

"Despite this, Eskom bonds are 40 bps tighter on the week," she said.

Indian Oil prints notes

In its new deal, Indian Oil sold $500 million 5¾% notes due 2023 at par to yield 5¾%, matching talk.

Deutsche Bank, HSBC and Standard Chartered Bank were the bookrunners for the Regulation S deal.

As of midday on Tuesday, the books were in excess of $3.5 billion.

Banyan Tree, Transelec bonds

Singapore-based hospitality company Banyan Tree sold S$70 million 5¾% notes due 2018 at par to yield 5¾% via HSBC, a market source said.

And Chile-based electricity transmission company Transelec priced $300 million 4 5/8% notes due 2023 at 99.336 to yield 4.709%, or Treasuries plus 220 bps.

JPMorgan and Scotiabank were the bookrunners for the Rule 144A and Regulation S deal.

Aeromexico prices deal

Also on Tuesday, Mexico-based aviation holding company Grupo Aeromexico, through unit SPV Mexican Aircraft Finance IV, LLC, priced $117.4 million of 2.537% secured notes due 2025 that are guaranteed by the Export-Import Bank of the United States, according to a press release.

Citigroup and JPMorgan led the deal, the proceeds of which will be used to refinance two Boeing 737-800 aircraft delivered in June and July and to finance one Boeing 737-800 aircraft to be delivered in August.

"This financing structure is unprecedented among Mexican private-sector companies," said Andres Conesa, chief executive officer of Grupo Aeromexico.

Turkish corporates see buyers

In trading on Tuesday, buyers were spotted for notes from some Turkish corporates, including Yapi ve Kredi Bankasi AS, Koc Holding AS Turkiye Sise ve Cam Fabrikalari AS (Sisecam), the London analyst said.

And sellers emerged for Akbank TAS.

Meanwhile, quasi-sovereign bonds from Russia were "stalling," she said.

MENA flows balanced

Flows were fairly balanced for bonds from the Middle East and North Africa, the analyst said.

The recent perpetual notes that Abu Dhabi Islamic Bank priced at par opened Tuesday at 102¾ bid, 103.37 offered. Later, the notes moved to 102.68 bid, 103.18 offered.

Dubai Islamic Bank's perpetual notes, which also priced at par, didn't fare quite as well - the bonds opened Tuesday at 99.12 bid, 99.68 offered, a trader said.

During the European afternoon the notes were seen at 98¾ bid, 99¼ offered.

"Perpetuals faded a little today after a good run," he said.

Nigeria's notes move up

The 5 1/8% notes due 2018 that Nigeria priced at 98.917 were quoted at 103 bid, 103¾ offered on Tuesday and closed there, a trader said.

The sovereign's 6¾% notes due 2023 that came to the market at 98.193 traded at 103½ bid, 104½ offered and closed there.

Lat-Am in focus

Higher-rated credits from the Latin American sovereign space traded lower and wider, giving up some of the previous day's gains, a New York-based trader said.

"There is very little trust in US yields standing their ground in the current range," he said. "We are clearly in pause and rally-hangover mode in sovereigns and corporates."

Still, bonds from Venezuela and Argentina managed to post some gains, he said.

Mersin port picks banks

In deal-related news, Turkey-based port Mersin Uluslararasi Liman Isletmeciligi AS (Mersin International Port) mandated Citigroup, DBS Bank and Unicredit Bank to lead a roadshow for a dollar-denominated issue of notes (expected ratings: Baa3//BBB-), a market source said.

The marketing trip will begin on Thursday.

A benchmark-sized, Rule 144A and Regulation S deal is expected to follow.

Ruwais Power gives guidance

Abu Dhabi-based Ruwais Power Co. PJSC, a consortium led by TAQA, set initial price talk in the 6¼% area for its upcoming issue of dollar notes, a market source said.

The issue, expected to price Thursday, will total no more than $825 million of notes due 2036.

Citigroup, BNP Paribas, HSBC, Mitsubishi UFJ Securities, National Bank of Abu Dhabi and Standard Chartered Bank are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to finance the Shuweihat 2 independent water and power project.

Roadshow for Meiya Power

China-based power projects company Meiya Power Co. Ltd. will set out on Thursday for a roadshow to market an issue of dollar-denominated notes, a market source said.

JPMorgan, Morgan Stanley, ABC International and ICBC (Asia) are the bookrunners for the Regulation S deal.

Korea Gas deal oversubscribed

The final book for Korea Gas Corp.'s recent $500 million issue of 2 7/8% notes due 2018 was $6 billion from 415 accounts, a market source said.

The notes priced at 99.479 to yield 2.988%, or Treasuries plus 168 bps.

About 44% of the orders came from non-Japan Asia, 36% from the United States and 20% from Europe.

Fund managers picked up 66%, banks 13%, central banks and sovereign wealth funds 9%, insurers 8% and private banks and ultra-high-net-worth accounts 4%.

Korea Development Bank, BofA Merrill Lynch, Credit Suisse, Deutsche Bank, Goldman Sachs and HSBC were the bookrunners for the deal.

Andrea Heisinger contributed to this article.

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