Deals from Thai Oil, Credit Europe Bank, Minerva, Tonon on busy day for EM; flows balanced

By Christine Van Dusen

Atlanta, Jan. 17 - Thai Oil Public Co. Ltd., Credit Europe Bank NV, Brazil's Minerva SA and Brazil's Tonon Bioenergia SA sold notes on a busy day for emerging markets assets.

"Investors and traders are chasing yield and, as such, duration on certain assets to try to achieve their year's yield and return targets," a London-based trader said. "Credits from Bahrain, Lebanon, Kuwait and Dubai are in vogue."

Flows were mainly balanced on Thursday, he said.

"The pure grab-attack we witnessed last week has paused," he said. "Partly I think due to valuations, partly due to the market taking a breather, and partly perhaps because we're expecting some supply."

The Markit iTraxx SovX index spread started the day 1 basis point tighter.

"Impressive spread moves," a trader said. "Overall, a busy day."

In trading, bonds from the Middle East and North Africa were active at the open on Thursday, a London-based analyst said.

"We're seeing paper around," she said. "We're also seeing a flattening bias in Dubai and Bahrain. And higher-beta still trades well."

From Latin America, investors were chasing the recent $600 million issue of 9 7/8% notes due 2017 from Brazil-based food processor Marfrig Alimentos SA, a New York-based trader said.

The notes moved up about 3 points in trading on Thursday.

The deal priced at par to yield 9 7/8% with Bank of America Merrill Lynch, Bradesco BBI, BB Securities and Itau BBA in a Rule 144A and Regulation S deal.

The proceeds will be used to extend the company's debt maturity profile and for general corporate purposes.

"Most credits are quiet so far, with the spread-based go-go names like Petrobras and Vale tightening in a few basis points to compensate for their prices, with US yields ticking back up," he said. "Positive undertones continue as high-yield new issues are dominated Street flows."

Turkey tightens

In other trading on Thursday, notes from Turkey opened a bit tighter, the analyst said.

Bonds from Tupras Holding, Akbank, Halkbank and Garanti Bank were lifted.

From Russia, corporate bonds were steady after a sell-off on Wednesday, she said.

"The Sberbank curve continues to outperform," she said.

She was also keeping an eye Russian petrochemical company OAO Sibur Holding, which will set out on Friday for a roadshow to market an issue notes.

Citigroup, JPMorgan, RBS, Credit Suisse, Gazprombank and Sberbank are the bookrunners for the Rule 144A and Regulation S deal.

"We expect the deal to generate good interest," she said.

Ukraine mostly unchanged

From Ukraine, sovereign bonds have been mostly unchanged, even as the World Bank downgraded the country's growth outlook from 3½% to 2.2% for 2013.

"Activity centered around the new Ukreximbank 2018s, though it was decidedly underwhelming," said Svitlana Rusakova of Dragon Capital.

The $500 million 8¾% notes due 2018, which recently priced at par, traded up as high as 100¼ but moved to 99.85 and later leveled out at 100.05 after pricing.

"Other corporate names remained silent," she said.

Thai Oil prices notes

In its new deal, Bangkok-based Thai Oil priced a $1 billion issue of notes in two tranches due Jan. 23, 2023 and 2043, a market source said.

The deal included $500 million 3 5/8% notes due in 2023 that priced at 99.171 to yield 3.725%, or Treasuries plus 185 bps. The notes were talked at a spread in the 190 bps area.

The second tranche of $500 million notes, due in 2043, carried a 4 7/8% coupon and priced at 97.31 to yield 5.062%, or Treasuries plus 200 bps. The notes were talked at a spread in the 205 bps area.

Barclays, HSBC and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S offering.

Credit Europe, Minerva issues

Also on Thursday, Netherlands-based Credit Europe Bank, a lender that serves emerging Europe, China and the United Arab Emirates, priced a $400 million issue of 8% notes due Jan. 24, 2023 at par to yield 8%, or Treasuries plus 709.3 bps, a market source said.

Citigroup, Goldman Sachs and HSBC were the bookrunners for the Regulation S-only deal.

And Brazil-based food processor Minerva sold an $850 million issue of 7¾% notes due Jan. 31, 2023 at 98.301 to yield 8%.

BTG Pactual, HSBC and Credit Suisse were the bookrunners for the Rule 144A and Regulation S deal.

Concurrently the company is launching a purchase offer for up to $500 million of the company's existing 2017, 2019 and 2022 bonds.

Tonon does deal

In another deal from Brazil, sugar producer Tonon priced a $200 million issue of 9¼% notes due Jan. 24, 2020 at 98.743 to yield 9½%, a market source said.

The notes were talked at a yield in the high-9% area.

BTG Pactual, Itau BBA and Santander were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used to refinance debt and for general corporate purposes.

Thursday also saw Russian Railways planning to issue $3 billion of bonds, a market source said.

The proceeds will be used for infrastructure projects.

Exalmar, Hengdeli roadshows

Peru-based fish processor Pesquera Exalmar SAA has mandated Citigroup and Santander for a roadshow to market an issue of notes from Jan. 21 to Jan. 23, a market source said.

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

A Rule 144A and Regulation S deal is expected to follow.

And China-based watch retailer and wholesaler Hengdeli Holdings Ltd. has mandated Deutsche Bank, Standard Chartered Bank, JPMorgan and HSBC as bookrunners for a dollar-denominated issue of notes.

A roadshow for the Regulation S deal began on Thursday and will travel through Hong Kong, Singapore and London.

Indika oversubscribed

The final book for Indonesia-based energy company PT Indika Tbk's $500 million issue of 6 3/8% notes due Jan. 24, 2023 was $7.6 billion from 278 accounts, a market source said.

The notes priced at par to yield 6 3/8% via Citigroup, Standard Chartered Bank and UBS in a Rule 144A and Regulation S deal.

About 40% of the orders came from Asia, 36% from the United States and 24% from Europe.

Asset and fund managers picked up 79%, banks 7%, private banks 12%, insurers 1% and others 1%.

The proceeds will be used to repay $235 million of credit facilities and other indebtedness, as well as for working capital and general corporate purposes.

Cheung Kong attracts orders

The recent issue from China's Cheung Kong (Holdings) Ltd. - $500 million 5 3/8% perpetual notes that priced at par to yield 5 3/8% - attracted 86% of its orders from Asia and 14% from Europe and the offshore United States.

Bank of America Merrill Lynch and Barclays Capital were the bookrunners for the Regulation S deal.

The notes were issued by special-purpose vehicle Mizar Enterprises Ltd., which will be renamed Cheung Kong Bond Securities (03) Ltd.

Private banks accounted for 60% of the orders, asset managers 36% and others 4%.

Cheung Kong is a Hong Kong-based multinational conglomerate.

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