China Development Bank and Russia's Gazprom, VTB sell bonds; long-dated EM notes seem safe

By Christine Van Dusen

Atlanta, July 26 - China Development Bank and two Russian corporate issuers - OJSC Gazprom and JSC VTB Bank - priced notes on a Thursday that saw risky assets as another European Central Bank official promised to do what is needed to keep the euro zone afloat.

The comments from ECB president Mario Draghi echoed the recent sentiments of another ECB official "who favors granting the European Stability Mechanism (ESM) a banking license to increase its firepower," according to a report from Barclays Capital. "Boosting the ESM firepower may be required to stabilize peripheral funding pressures, but it may take further market stress for member countries to agree and, therefore, look to fade this rally."

In trading on Thursday, Dubai's Jebel Ali Free Zone (Jafza) saw its notes tighten and bonds from South Africa were rock solid as long-dated notes remained in demand, a London-based trader said.

In its new deal, Beijing-based China Development Bank priced a two-tranche RMB 2.5 billion issue of notes due Aug. 2, 2015 and 2032 in a Regulation S transaction, a market source said.

The deal included RMB 1.5 billion 2.95% notes due 2015 that matched talk via Bank of China, BOCI, Barclays Capital, HSBC, ICBC, Standard Bank and Standard Chartered Bank.

The second tranche, RMB 1 billion 4.3% notes due 2032, also matched talk. The bookrunners for that tranche were Bank of China, BOCI, Barclays Capital, HSBC and Standard Chartered Bank.

Gazprom sells notes

Also on Thursday, Russia's Gaz Capital SA - a funding vehicle set up by global energy company Gazprom - priced a €650 million tap of its 3.755% notes due March 15, 2017 at 101.083 to yield 3½%, a market source said.

Credit Agricole, Gazprombank and JPMorgan were the bookrunners for the Regulation S-only deal.

The original issue totaled €750 million and priced on July 11 at par.

Proceeds from the offering will be used to finance a loan to Gazprom, and the proceeds of the loan will be used for general corporate purposes.

VTB Bank priced a $1 billion issue of perpetual notes to yield 9½%, a market source said.

The notes priced at the low end of talk, set at 9½% to 9¾%.

Citigroup, UBS and VTB Capital were the bookrunners for the Rule 144A and Regulation S deal.

Indian lender oversubscribed

The new $1.25 billion issue of 4 1/8% five-year notes from State Bank of India attracted as much as $6.8 billion in orders, a market source said.

The notes priced at 99.14 to yield 4.318%, or Treasuries plus 375 basis points via Citigroup, Barclays Capital, Bank of America Merrill Lynch, Deutsche Bank, UBS and JPMorgan in a Rule 144A and Regulation S deal.

About 47% of the orders came from Asia, 22% from Europe and 31% from the United States.

Asset managers accounted for 49%, private banks 24%, 12% banks, 12% insurance companies and 3% to the public.

Trading for Access Bank

In the secondary market on Thursday, the recent $350 million issue of 7¼% notes due 2017 from Nigeria's Access Bank plc that priced at par opened at 98.25 bid, 99 offered before closing at 98.50 bid, 99 offered.

On Wednesday the notes were quoted at 98 bid, 99 offered.

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

The recent deal from Dubai's Jafza - a $650 million issue of 7% notes due 2019 that also priced at par - was trading at 1045.50 bid, 106 offered on Thursday.

"That trades well," a trader said. "It's tighter by 13 bps."

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD, National Bank of Abu Dhabi and Standard Chartered were the bookrunners for the Regulation S deal.

Qatar notes stay active

The $4 billion sukuk issue from Qatar funding vehicle SoQ Sukuk remained active on Thursday.

The deal included $2 billion 2.099% notes due 2018 and $2 billion 3.241% notes due 2023 that both priced at par.

The 2018 notes opened Thursday at 100.35 bid, 100.50 offered after trading Wednesday at 100.35 bid, 100.45 offered. The 2023 notes started Thursday at 102.05 bid, 102.35 offered after Wednesday's levels of 101.85 bid, 102.05 offered.

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

And the $500 million issue of 5¼% seven-year notes from Dubai's Majid Al Futtaim that came to the market at par was quoted at 100.12 bid, 100.62 offered on Thursday after trading Wednesday at 100.25 bid, 100.50 offered.

South Africa bonds 'a rock'

From South Africa, five-year credit default swaps were trading at 143 bid, 148 offered after Wednesday's level of 154 bps mid.

"Just a rock, the bonds," a trader said.

Long bonds still popular

Long-dated emerging markets bonds remained in vogue on Thursday, a London-based trader said.

"The bottom line is they're doing pretty well," he said. "Granted, versus a week ago a few names are a little lower. But overall, demand is still there. Does issuing into this strength make sense? Yes."

Mexico's 4¾% 2044 notes were trading Thursday at 114.50 bid, 115.50 offered, while Colombia's 6 1/8% 2041 bonds were at 136.75 bid, 137.75 offered. Brazil's 2041 bonds, with a 5 5/8% coupon, were trading at 128 bid, 129 offered.

Indonesia's 5¼% 2042 bonds were quoted Thursday at 109.75 bid, 110.50 offered, and Turkey's 6% 2041 bonds were seen at 113 bid, 114 offered.

Dubai-based DPWorld's 2037 notes were trading at 103.50 bid, 104.50 offered, while Egypt's 6 7/8% 2040 bonds were quoted at 86 bid, 88 offered.

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