EM risk sentiment improves, trading picks up; Industrial Bank of Korea, Yanlord Land price

By Christine Van Dusen

Atlanta, March 22 - Industrial Bank of Korea and Singapore's Yanlord Land Group Ltd. sold notes on a Tuesday that saw an uptick in volumes as the market continued to adjust to the new normal in the Middle East and Japan.

"Risk has been moderately on," according to an RBC Capital Markets report. "The situation at the Fukushima nuclear plant has continued to stabilize ... The situation in the Middle East, meanwhile, remains highly volatile, but developments overnight have not been market-moving, with oil prices little changed on the day."

The JPMorgan Emerging Markets Bond Index Plus spread widened just 1 basis point in the morning, to Treasuries plus 268 bps, before closing at Treasuries plus 270 bps.

Said a London-based trader: "There's been a good pick-up in activity, as volumes today versus yesterday have confirmed."

Asian issuers print notes

Seoul-based Industrial Bank of Korea's $500 million 3¾% notes due Sept. 29, 2016 came to market Tuesday at 99.371 to yield 3.878%, or Treasuries plus 183 bps, a market source said.

Morgan Stanley, BNP Paribas, Citigroup and RBS were the bookrunners for the Rule 144A and Regulation S notes, which are non-callable.

"That's pretty much basically unchanged," a New York-based market source said later in the trading day.

And Singapore-based property developer Yanlord Land sold $400 million notes due March 29, 2018 at par to yield 10 5/8%, a market source said.

HSBC, JPMorgan and RBS were the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for four years.

"That's doing a little bit better overall," the New York-based source said. "I heard there was good demand, that it was five times oversubscribed. But there's been no real follow-through on buying."

Slovenia plans deal

In other deal-related news on Tuesday, the Republic of Slovenia is planning a euro-denominated issue of benchmark-sized notes due March 2026, a market source said.

Credit Agricole, ING, Societe Generale and Unicredit are the bookrunners for the deal, which is expected to price this week.

The sovereign last brought a deal to market in March of 2010, with €1 billion 2¾% notes due 2015.

"Euro zone concerns came to the forefront again today, which ensured that the 'cheap' new deal for Slovenia has seen little follow-through interest," a market source said.

PGNiG revives plans

Also from Europe, Poland-based natural gas company Polskie Gornictwo Naftowe i Gazownictwo (PGNiG) is planning a bond offering after the release of its second-quarter earnings, a market source said.

The company previously mandated BNP Paribas, Societe Generale and Unicredit for a euro-denominated bond offering. The deal, to total €1.2 billion, was announced in September and had been expected to price by the end of 2010.

Also on Tuesday, South Korea's Export-Import Bank of Korea (Kexim) mandated HSBC, RBS and UBS for a non-deal roadshow in London and Edinburgh from Wednesday to Friday, a market source said.

Mriya Agro taps bookrunners

Ukraine-based agriculture producer and trader Mriya Agro Holding plc has mandated Merrill Lynch, RBS and UBS as the bookrunners for a dollar-denominated bond offering, a market source said.

The Rule 144A and Regulation S deal is expected to launch following a roadshow this week.

The marketing trip began Monday in London and will stay there until Wednesday, when the roadshow will wrap up in New York.

The issuer postponed a similar offering in November.

"It's interesting to see Ukraine's Mriya having another go at their deal, which makes sense given other high-yielders like Avangard and Yuksel Insaat have traded well over the last week," a trader said.

The Mriya Agro news came as Ukraine was seen 20 bps tighter, while Belarus widened 20 bps on concerns about devaluation.

Trading activity increases

In trading, Russia, Kazakhstan and South Africa saw some activity on Tuesday, a market source said.

"They're all having much more depth on the bid side," he said. "Turkey also has been opening very firm."

Said a London-based market source: "Turkey saw some very good demand for corporate paper, but the long end of the sovereign curve came under pressure in the afternoon, widening 2 to 3 bps."

Market-watchers were also tracking the £350 million notes due March 25, 2031 that OAO Russian Railways Co. priced on March 18 at par to yield 7.487%, or Gilts plus 325 bps.

Barclays Capital, Goldman Sachs and VTB Capital were the bookrunners for the Regulation S deal.

"That's been performing like a champion," a source said. "It's 20 bps tighter."

Dubai gets support

Among Middle Eastern names on Tuesday, Dubai was well supported, the London-based trader said.

"That still has a solid bid now, and it is seen to be the 'safe haven' in MENA," he said.

He was also trading some paper from Morocco. "Having traded the Morocco 20 euro notes at 91.25 first thing, they're now softer, last down at 90.75," he said.

Egpyt's 2020 dollar notes were up about 2 points over the last week. The notes were seen trading at 94.75 on Tuesday.

And investors were mostly shaking off the continued turmoil in Bahrain. "We again are only really seeing buyers of Bahraini risk," he said.

IPIC fades

Meanwhile, the recent three-tranche issue of sterling- and euro-denominated notes from Abu Dhabi-based oil investment entity International Petroleum Investment Co. that priced March 9 was taking a breather on Tuesday.

The deal included £550 million 6 7/8% notes due March 14, 2026 at 99.506 to yield Gilts plus 270 bps, €1.25 billion 4 7/8% notes due March 14, 2016 that priced at 99.379 to yield OBL plus 244.8 bps and €1.25 billion 5 7/8% notes due March 14, 2021 that priced at 98.737 to yield DBR plus 276 bps.

"That credit is pausing for breath," a trader said. "The 2021 euro notes reached as high as 98.375 this morning before fading back to 98."

Qatar names lag

The Emirate of Ras al Khaimah was well bid on Tuesday, the trader said. "Although it must be approaching a level where it looks a little tired on a spread basis," he said.

Other credits lagged, including long-dated Qatar and Qtel International, as well as Kuwait's Kipco.

"Front-end Qatari paper is pretty well bid, outperforming the long end," he said. "Further rally in the market will see investors forced out further along the curve, to chase the spread."

Overall, though, it was a decent day for spreads in the Middle East region.

"The week-on-week moves are looking impressive on many of the names," he said. "Part of me still favors fading some of these rallies. However, remember the money has to go somewhere."

Some selling for Philippines

The New York-based market source was watching the new issue of $1.5 billion 5½% notes due 2026 from the Republic of the Philippines, which priced Monday at 99.495 to yield 5.55%, or Treasuries plus 223.8 bps.

Citigroup, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan and UBS were the bookrunners for the off-the-shelf notes.

"The trading for that is not great, not terrible," he said. "It's down about 3/8. People have a heart attack when it doesn't go straight up. When there's no instant gratification, they want to sell. It's a little bit heavy there."

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