Ukraine talks 10-year notes at 200 bps; Xinhua prices $100 million; more lower tier II deals appear

By Paul A. Harris

St. Louis, Nov. 14 - The Philippines and Indonesia rallied early in the Asian session on the back of a strong day in the local equity markets Tuesday, only to succumb late to profit taking, a source in Europe told Prospect News an hour before the New York open.

Meanwhile an emerging markets investor in the United States said that the broad market looked pretty good early Tuesday morning, with local currencies rallying.

The sentiment is positive, the investor added. Hence people are going into the higher yielding credits.

Later in the day a sell-sider said that emerging markets paper traded a little lower in terms of dollar price, but ended tighter in terms of spread.

Meanwhile a busy primary market cranked out a decent portion of news.

Ukraine whispered at 200 over

Ukraine on Tuesday gave initial guidance on its expected $1 billion offering of 10-year sovereign bonds at 10-year Treasuries plus 200 basis points area.

One source told Prospect News that the deal is expected to price on Wednesday. Another, however, said that it could be later in the week before terms emerge.

Credit Suisse, Deutsche Bank and UBS are in the lead.

Ukraine last brought a dollar-denominated bond issue in July 2004 when it priced a $500 issue of floating-rate notes due 2009 (B1/B/B+) at par to yield 6-month Libor plus 337.5 basis points. That issue was downsized from $600 million.

Late last week Moody's revised the outlook on Ukraine's B1 long-term foreign currency sovereign debt rating from to positive from stable, citing greater political stability, which increases the likelihood of prudent and consistent economic policy, according to the rating agency.

A sell-side source not in the deal said that given the tenor and present market conditions the transaction should do okay.

The source said that there is presently quite a lot of cash at work in the new issue market

"It has been crazy," the sell-sider said. "There have been deals oversubscribed on several occasions, and the only driver seems to be absolute yield."

Hedge funds as well as real-money accounts have been active, the source said, and added that this trend is likely to continue.

Xinhua prices $100 million

Terms emerged on a deal from a Chinese corporate issuer.

Financial and media services provider Xinhua Finance Ltd. priced a $100 million issue of 10% five-year global bonds (B+) at 99.401 to yield 10¼%, at the tight end of the 10¼% to 10½% price talk.

ABN Amro was the bookrunner for the debt refinancing and acquisition funding deal.

Lower tier II deals

News was heard from a pair of financial institutions - one Brazilian, the other Indonesian - that are in the market with lower-tier 2 debt offerings.

Brazil's Banco Cruzeiro do Sul SA is expected to price a dollar-denominated offering of 10-year lower tier II subordinated notes (B2) by the end of the week.

A market source said early Tuesday that the books were open, and added that the notes would be marketed without a roadshow.

Initial guidance is for a yield in the 10¾% area.

Dresdner Kleinwort has the books.

Elsewhere Indonesia's PT Bank Lippo Tbk has given out 7 3/8% area guidance on its $150 million offering of 10-year lower tier II notes (Ba3/B+), which are expected to price Wednesday afternoon in London via UBS.

Bank Lippo is a commercial bank headquartered in Indonesia, and is majority owned by Khazanah, the investment holding arm of the Government of Malaysia.

Korean Housing talks $500 million

Korean National Housing Corp. talked its proposed $500 million maximum offering of five-year floating-rate notes at three-month Libor plus 27 to 30 basis points.

The roadshow continues on Wednesday in Boston.

Citigroup, Deutsche Bank and HSBC are leading the Rule 144A/Regulation S offering.

Temirbank talks dollar deal

News was also heard from Kazakhstan's JSC Temirbank (B1//B-), which is in the market with a dollar-denominated offering of five-year fixed-rate senior notes.

The talk is 9 3/8% area, with the books expected to close on Wednesday, at the close of business London time.

Standard Bank plc has the books.

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