Industrial Bank of Korea prices as others plan notes; Qatar tightens talk for deal on deck

By Christine Van Dusen

Atlanta, July 10 - Industrial Bank of Korea priced notes on Tuesday as the new issue pipeline began to fill up with planned deals from such emerging markets names as South Africa's Transnet SOC Ltd., Nigeria's Access Bank plc, Chile's Corporacion Nacional del Cobre de Chile (Codelco), Indonesia's PT Kawasan Industri Jababeka Tbk. and Dubai-based Emaar Properties.

But the issuer that got the most attention on Tuesday was Qatar, which revised price talk for an up to $4 billion issue of Islamic bonds due in January of 2018 and 2023 that is expected to price on Wednesday.

"These sukuks fit nicely into their curve, and at this point in time, these deals are both appealing," a London-based trader said.

Still, emerging markets investors remained somewhat wary overall, given Europe's continuing economic turmoil.

"The week will likely end with investors still cautious on EM growth prospects, focusing on the broader flagging of momentum in key cyclical indicators," according to a report from Barclays Capital. "Risky assets are finding some support in Europe, but they still lack direction beyond today's price action."

In its new deal, Industrial Bank of Korea priced $500 million 2 3/8% notes due July 17, 2017 at 99.532 to yield 2.475%, or Treasuries plus 185 basis points, a market source said.

Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

Qatar revises guidance

For its upcoming deal, Qatar revised price talk to mid-swaps plus 120 bps to 125 bps for the five-year notes. Initial talk had been set at mid-swaps plus 135 bps. The long 10-year notes were talked Tuesday at mid-swaps plus 160 bps to 165 bps, after initial guidance of mid-swaps plus 175 bps.

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

As of Tuesday morning, at the conclusion of the sovereign's roadshow in Asia, the book was at about $22 billion.

"The meetings in Asia were pretty obvious. There was no need to head to the Gulf region where it's already well known, nor the United States, because these are sukuks, nor Europe, where it is also well known," a London-based trader said. "To target the big Islamic investors and funds in Southeast Asia was pretty straightforward."

Qatar should perform

Qatar's upcoming fixed-rate sukuk issue is unusual - very few exist, the London trader said.

"They are currently limited to Malaysia, Indonesia, Bahrain, Ras al Khaimah and Dubai," he said.

Qatar's new five-year notes should yield about 2.22% while the 10-year notes should be in the 3.4% area. Taking a look at other credits in the sovereign's peer group, Brazil's 2017 notes are yielding 1¾%, Mexico's 2017 notes have a 1.61% yield, France's five-year notes have a 1.02% yield, and Malaysia's 2016 notes are seeing a 2.08% yield.

"In this global environment, with the debt dynamics of these other credits versus Qatar's debt dynamics - coupled with the liquidity available regionally and globally - we should see [Qatar's new] deals perform," he said. "Versus global peer groups, the yields and spreads are interesting."

On Tuesday, Qatar's existing 2017 notes were trading at 104.12 bid, 104.62 offered, while its 2022 notes were seen Tuesday at 110.25 bid, 110.75 offered.

Transnet plans roadshow

In deal-related news, Johannesburg-based rail, port and pipeline company Transnet will hold investor meetings from July 12 to July 18 ahead of a possible Rule 144A and Regulation S transaction subject to market conditions, according to a company release.

The meetings, with JPMorgan and Standard Bank, will be held in London on July 12 and July 13, Los Angeles on July 16, Boston on July 17 and New York on July 18.

Additionally, a global investor conference call will be held on July 12.

Meanwhile South Africa's five-year credit default swaps closed at 155 mid, a trader said.

"The sovereign bonds are very well bid," he said.

Access Bank taps bookrunners

Nigeria's Access Bank mandated Citigroup and Goldman Sachs for a roadshow to market an issue of dollar bonds, a market source said.

The marketing trip for the Rule 144A and Regulation S offering will begin Wednesday.

Also on Tuesday, Chilean copper mining company Codelco announced plans for a dollar-denominated issue of 10- and 30-year notes, a market source said.

HSBC and JPMorgan are the bookrunners for the deal.

Roadshows for Kawasan, Emaar

Indonesia-based developer Kawasan mandated Credit Suisse and Standard Chartered Bank as bookrunners for a dollar-denominated offering of senior notes.

The notes will be marketed during a roadshow from July 11 to July 18 in Singapore, London, New York, Boston and Los Angeles.

Another roadshow is set to begin on July 11. Dubai-based developer Emaar Properties' upcoming dollar-denominated issue of Islamic bonds will be marketed in London starting Wednesday.

Al Hilal Bank, Barwa Bank, Dubai Islamic Bank, Emirates NBD Capital, HSBC, Noor Islamic Bank and Standard Chartered Bank are the bookrunners for the Regulation S deal.

"Bids are pulling back," a trader said.

Majid Al Futtaim trades up

In trading on Tuesday, the $500 million issue of 5¼% seven-year notes from Dubai's Majid Al Futtaim that came to the market at par hit a high print of 101 on Tuesday before settling in at 100.15 bid, 100.40 offered.

The notes traded Monday at par bid, 100.50 offered.

JPMorgan, National Bank of Abu Dhabi, Barclays Capital, Standard Chartered and UBS were the bookrunners for the Regulation S transaction.

The Kingdom of Bahrain's recent $1.5 billion issue of 6 1/8% notes due July 5, 2022 was also quoted up on Tuesday at 100.25 bid, 100.50 offered after trading on Monday at 100.15 bid, 100.40 offered.

The notes priced at 99.867 via Citigroup, Gulf International Bank, JPMorgan and Standard Chartered Bank in a Rule 144A and Regulation S deal.

Korean deal in demand

In other news, the final book for the $500 million issue of 2½% notes due 2017 from electricity generator and supplier Korea East-West Power Co. Ltd. was $4.8 billion with 297 accounts involved, a market source said.

The notes came to the market at 99.641 to yield Treasuries plus 195 bps via Bank of America Merrill Lynch, Citigroup, HSBC, Morgan Stanley and UBS in a Rule 144A and Regulation S deal.

About 49% of the orders came from Asia, 26% from Europe and 25% from the US.

Asset managers accounted for 51%, public institutions 16%, banks 15%, private banks 8% and insurers 10%.

Aleesia Forni contributed to this article.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.