Pakistan, Kenya are issuers in holiday-shortened week; Ukraine bonds dip; Bulgaria deal ahead

By Christine Van Dusen

Atlanta, Nov. 26 – Pakistan and Kenya sold notes as bonds from Latin America stayed firm on Wednesday morning amid limited liquidity ahead of the Thanksgiving holiday in the United States.

Short-dated paper fared best as selling slowed, a New York-based trader said.

Mexico’s Cemex SAB de CV was better bid for the second day in a row while Brazil-based Vale SA tightened between 3 basis points and 5 bps.

“United States high-grade and high-yield continue to tighten and crank out new issues, global equity and rates are cruising along, our pipeline is not thick but consistent, and U.S. rates continue to stay in control,” he said. “No problem here, unless you count continuing oil price depression and China's questionable growth situation.”

Looking to Ukraine, sovereign bonds entered into the end of the week about a half-point lower as Russia reportedly continued to provide support to separatist rebels in Eastern Ukraine.

“Corporates and quasi-sovereigns were heavy as well,” said Svitlana Rusakova of Dragon Capital. “Not much was on the offer side, yet it did pressure prices, given the overall environment.”

In its new deal, Pakistan sold $1 billion 6 ¾% sukuk notes due Dec. 3, 2019 at par to yield 6¾%, a market source said.

The notes were talked at a yield in the 6 7/8% area.

Citigroup, Deutsche Bank, Dubai Islamic Bank and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

In deal-related news on Wednesday, Bulgaria sought issuance and Industrial and Commercial Bank of China Ltd. set out on a roadshow.

Kenya sells notes

In another new deal, Kenya priced $750 million in taps of its notes due June 24, 2019 and 2024, a market source said.

The $250 million 5 7/8% notes due 2019 priced at 103.524 to yield 5%, or Treasuries plus 342.9 bps.

The notes were talked at a yield of 5% to 5.1%.

The $500 million notes due 2024 priced at 107.041 to yield 5.9%, or Treasuries plus 363.6 bps.

Talk was set at 6¼%.

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

The proceeds will be used for general budgetary purposes.

Beijing Capital prices bonds

In its new deal, China’s Beijing Capital Land Ltd. priced $450 million 7 1/8% perpetual notes at par to yield 7 1/8%, a market source said.

HSBC, DBS Bank, ICBC International and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The integrated property developer is based in Beijing.

The deal drew a final book of $3.5 billion from 150 accounts, with 89% from Asia and 11% from Europe.

Fund managers picked up 51%, private banks 31%, banks 16% and corporates 2%.

Bulgaria seeks issuance

Bulgaria is looking to issue euro-denominated notes before the end of the year, a market source said.

The size of the issue could total €1.5 billion.

The proceeds will be used to fund the bailout of the Commercial Corporate Bank and for addressing the sovereign’s budget deficit.

ICBC on roadshow

China’s ICBC set out on Wednesday for a roadshow to market an issue of Basel III-compliant perpetual notes, a market source said.

ICBC International, Goldman Sachs, UBS and BofA Merrill Lynch are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow began in Hong Kong and will travel to Singapore, London, Frankfurt, New York and Boston before concluding on Dec. 2.

The bank is based in Beijing.

CDB draws orders

The final book for China Development Bank’s two-tranche issue of $650 million notes due on Dec. 2, 2019 and 2024 was $1.75 billion, a market source said.

The deal included $250 million 3¼% notes due 2019 that priced at 99.470 to yield 3.366%, or Treasuries plus 175 bps.

That tranche saw 73% of its orders come from Asia, 22% from Europe and 5% from the Americas.

Fund managers picked up 57%, sovereign wealth funds 19%, banks 17% and insurers 7%.

The $400 million 4 ¼% notes due 2024 priced at 99.092 to yield 4.363%, or Treasuries plus 205 bps.

About 85% of the orders came from Asia, 13% from Europe and 2% from the Americas.

Fund managers accounted for 43%, insurance 37%, banks 12% and sovereign wealth funds and others 8%.

Standard Chartered Bank, Goldman Sachs, Morgan Stanley, ANZ, Barclays, Citic Securities, Citigroup, DBS Bank, Deutsche Bank, HSBC and RBS were the bookrunners for the Regulation S deal.

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