Sri Lanka, Guangzhou R&F price notes as primary revs up; Turkey under pressure; buyers for Ukraine

By Christine Van Dusen

Atlanta, Jan. 6 - Sri Lanka and China's Guangzhou R&F Properties Co. Ltd. sold notes on a Monday that saw slightly better spreads, active trading and numerous issuers - including China's Peking University Founder Group Co. Ltd. and Brazil's Banco Nacional do Desenvolvimento Economico e Social SA (BNDES) - lining up new deals for the new year.

"[Emerging markets] has remained surprisingly robust over the festive period, despite tapering, as U.S. 10-year Treasuries hover around 3%, although so far we have yet to see the impact of issuance on the market," a London-based analyst said.

The exception, she said, was Turkey, which continued to reel from the corruption scandal that resulted in the arrest of more than 80 people, including public figures.

Buyers were seen for Koc Holding AS, Albaraka Turk Katilim Bankasi AS, Turkiye Is Bankasi AS (Isbank) and Turkiye Vakiflar Bankasi TAO (Vakifbank).

Long-end sovereign bonds remained under pressure, with long-dated bonds wider as much as 18 bps and front-end bonds wider by as much as 35 bps, she said.

"It has also created uncertainty for the elections this year," she said.

Also putting pressure on Turkish bonds: the Central Bank is dealing with a weak currency and high current account deficit, she said.

Given that the head of Turkiye Halk Bankasi (Halkbank) was among those arrested, the Turkish lender has also been taking a hit.

"Halkbank bonds have suffered, with the Halkbank 2017s trading just circa 15 bps inside the Halkbank 2020s, at 380 bps, thereby offering value, although clearly risks remain with the ongoing investigation," she said.

Ukraine, Russia corporates

Looking to Ukraine, sovereign bonds attracted buying interest, with the front end about 60 bps tighter, a trader said.

"We are generally seeing better buyers across the board in names such as Hungary, Serbia and Romania," she said. "In Russia, there are buyers of Vimpelcom, Lukoil, Russian Agricultural Bank, VEB and sovereign cash on the long end."

Said another trader, "Generally much easier selling bonds than sourcing and bidding them. I suspect that will be the theme this week before supply announcements hit the wires next week."

Gulf bonds 'fairly active'

From the Middle East, the best performers were bonds from Kuwait as well as Dubai-based Emaar Properties, Dubai's DPWorld and GEMS Menasa (Cayman) Ltd., a London-based trader said.

"We also saw some long-overdue demand for the Qtel curve, led by the 2023s, 2025s and 2028s," he said. "I still like the new 2018s, as they should benefit from the 2019s and 2016s being very hard to source."

Two-way activity was reported for Dolphin Energy's 2021 dollar notes.

"Some interest in Dubai," a trader said. "DPWorld's 2037s were trading last at par."

Some perpetuals catch bid

Among perpetual bonds from the Middle East, Emirates Islamic Bank lagged its peers while Majid Al Futtaim Holding saw its perpetuals "nicely bid" above 102, the London trader said.

Some bonds from the Middle East were difficult to source, he said, including the long end for Abu Dhabi National Energy Co. (TAQA) and International Petroleum Investment Co. (IPIC).

Bahrain Telecommunications Co.'s notes were 10 bps tighter while Bahrain's 2022s and 2023s faced demand.

"Finally a semblance of liquidity and demand as the market starts the year on the front foot," a trader said. "The Gulf region market started to show its hand last Friday and continued on from that theme today."

Sri Lanka sells bonds

In its new deal, Sri Lanka sold $1 billion 6% notes due 2019 at par to yield 6%, a market source said.

The notes were talked at a yield in the 6¼% area.

Citigroup, HSBC, Standard Chartered Bank and UBS were the bookrunners for the Rule 144A and Regulation S deal.

Chinese corporate prints notes

China's Guangzhou R&F Properties, through subsidiary Trillion Chance Ltd., priced $1 billion 8½% notes due 2019, a market source said.

The pricing matched talk, set at 8½%.

Citigroup, Citic Securities, Deutsche Bank, Goldman Sachs, Standard Chartered Bank, UBS, BofA Merrill Lynch, HSBC and Morgan Stanley were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance existing indebtedness and for general corporate purposes.

Other details were not immediately available on Monday.

Peking University on road

China's Peking University Founder Group is on a roadshow to market a renminbi-denominated issue of notes, a market source said.

DBS Bank is the sole bookrunner for the Beijing-based technology conglomerate's Regulation S deal.

The roadshow began on Monday.

BNDES plans roadshow

Brazil's BNDES will begin marketing on Tuesday a euro-denominated issue of notes during a roadshow, a market source said.

Deutsche Bank, JPMorgan and Santander GBM are the bookrunners for the deal.

The roadshow begins on Tuesday in London and concludes on Wednesday in Amsterdam, Paris, Frankfurt and Munich.

BNDES is an economic and social development bank based in Rio de Janeiro.

Roadshow for Croesus

Singapore's Croesus Retail Asset Management Pte. Ltd. will set out on Tuesday for a roadshow to market a euro-denominated issue of notes, a market source said.

The company previously announced the establishment of a $500 million euro medium-term note program.

DBS Bank Ltd. and United Overseas Bank Ltd. are the arrangers and dealers of the program.

Proceeds will be used for financing or refinancing acquisitions and investments, financing property development and refinancing existing borrowings, as well as for general corporate purposes.

The retail business trust is based in Singapore with an initial portfolio located in Japan.

ADBC sets marketing trip

Agricultural Development Bank of China (ADBC) will set out on Tuesday for a roadshow to market an issue of renminbi-denominated notes, a market source said.

The Beijing-based lender has mandated Bank of China, Standard Chartered Bank, Bank of Communications (Hong Kong), CCB International and ICBC Asia as bookrunners for the Regulation S deal.

Baroda to issue notes

India's Bank of Baroda will market an issue of benchmark-sized and dollar-denominated notes due in 2019 during a roadshow starting Wednesday, a market source said.

BofA Merrill Lynch, Barclays, Citigroup, JPMorgan and Standard Chartered Bank are the bookrunners for the Rule 144A and Regulation S deal.

No other details were immediately available on Monday.

Indian Railways picks banks

Indian Railway Finance Corp. Ltd. is looking to issue up to $600 million in notes, a market source said.

No other details were immediately available on Monday.

Indian Railway Finance is a subsidiary of New Delhi-based Indian Railways.

Kaisa plans add-on

China's Kaisa Group Holdings Ltd. is looking to issue an add-on to its existing $550 million 8 7/8% notes due in 2018, according to a company filing.

Citigroup, Credit Suisse and HSBC are the bookrunners for the Regulation S deal.

The original issue priced on March 19 at par.

The proceeds from the add-on will be used to refinance existing indebtedness, finance existing and new property projects and for general corporate purposes.

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