Issues from Dubai's Majid Al Futtaim, Industrial Bank of Korea; QNB, Brazil, HDFC on deck

By Christine Van Dusen

Atlanta, Oct. 23 - Dubai's Majid Al Futtaim Holding LLC (MAF) and Industrial Bank of Korea sold new notes on an active Wednesday for emerging markets assets.

"Very busy day, all told," a London-based trader said.

U.S. Treasuries fell to 2.48% on Wednesday morning, following Tuesday's news that payrolls data missed estimates. This, plus the pressure of the government shutdown, had investors thinking the Federal Reserve will delay any tapering of its bond-buying program.

"Central and emerging Europe, the Middle East and Asia are opening relatively unchanged in spread terms this morning, although we are generally seeing better buyers," a London-based analyst said.

The Markit iTraxx SovX CEEME ex-EU index spread on Wednesday opened at 213 basis points over Treasuries, tighter by 3 bps. The corporate index - seen Tuesday at a 348 bps spread - was tighter by 4 bps on Wednesday morning.

It was against this backdrop that Dubai's MAF sold $500 million 7 1/8% perpetual notes at par, an issue that saw sellers take the bond down to 99 7/8 before some late-day demand emerged at par, the London trader said.

In other trading on Wednesday, two-way activity was noted for the perpetual notes from Dubai Islamic Bank and Abu Dhabi Islamic Bank, a trader said.

"Good flow, actually," he said.

He was also keeping tabs on the upcoming $350 million five-year issue expected from Dubai-based Topaz Energy and Marine Ltd., which is on a roadshow for a Rule 144A and Regulation S deal.

"Plenty of people are scratching their heads over this bond," he said. "However, she will come with a yield."

In other deal-related news, Qatar National Bank SAQ (QNB) launched a two-tranche issue of notes and Brazil and India's HDFC Bank Ltd. are looking to issue bonds.

Dubai conglomerate sells notes

The new notes from Dubai-based MAF were initially talked at a yield in the mid- to high-7% area before guidance was set at 7 3/8% a market source said.

BofA Merrill Lynch, Emirates NBC, Goldman Sachs, HSBC, JPMorgan and Standard Chartered Bank were the bookrunners for the Regulation S deal.

MAF previously delayed a sale of dollar-denominated perpetual hybrid notes due to volatile market conditions.

Sellers for new MAF notes

Prior to pricing, the new notes from MAF were trading up in the gray as much as 50 cents, a trader said.

"It's only $500 million from a well-known and well-regarded name," he said. "While I was definitely interested at the initial price guidance, I think a lot of the juice has been squeezed, but I can still see it performing OK in this environment."

After the notes priced, they quickly moved to 100.10 bid, 100.30 offered before trading at par bid, 100.15 offered.

"Only sellers," the trader said.

During the late morning in New York, the notes were quoted at 99¾ bid, par offered. At mid-afternoon the notes were spotted at par bid, 100 1/8 offered.

IBK prints bonds

In another new deal, Industrial Bank of Korea priced a €500 million issue of 2% notes due 2018 at 99.779 to yield mid-swaps plus 85 bps, a market source said.

Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC and Societe Generale were the bookrunners for the deal.

QNB launches two-tranche deal

Qatar National Bank launched a $750 million issue of three-year floating-rate notes and $750 million five-year fixed-rate notes, a market source said.

The three-year notes were launched at a spread of Libor plus 125 bps, tighter than initial guidance of 140 bps.

The five-year notes - talked at mid-swaps plus 155 bps - launched Wednesday at mid-swaps plus 145 bps.

HSBC, Standard Chartered Bank, JPMorgan, RBS and Qatar National Bank are the bookrunners for the deal.

"This gives QNB probably the most active bank senior curve in the region, though granted it's without the a perpetual bond," a trader said.

Brazil, HDFC to issue notes

Brazil is planning to issue dollar-denominated global bonds due in January 2025 as part of a tender offer for nine outstanding bonds, according to a filing from the sovereign.

Bradesco BBI, Deutsche Bank and HSBC are the bookrunners for the new Securities and Exchange Commission-registered notes.

The proceeds will be used for liability management transactions and for general budgetary purposes.

And Mumbai-based HDFC Bank is looking to sell a benchmark-sized issue of dollar-denominated notes due in three years in a Regulation S deal.

Middle East in focus

In trading from the Middle East, Qatar-based Al Khalij Commercial Bank's new 3¼% notes due 2018 that priced at 99.575 were seen Wednesday at par, a trader said.

The new notes from the Emirate of Ras al Khaimah - 3.297% notes due in 2018 that priced at par were sighted Wednesday at 101.

"Good activity on Abu Dhabi Islamic Bank and Dubai Islamic Bank perpetuals here," he said.

And the 2023 bonds from Emirates airline traded Tuesday at 94½ bid, 95¼ offered, about 21 bps tighter on the week.

Rosneft signs contract

One trader was keeping an eye on Russia-based oil company OAO Rosneft, which signed a prepaid export contract with China Petrochemical & Chemical Corp. (Sinopec Group).

This, along with another prepayment contract, "should allow Rosneft to handle the significant maturities coming up over the following years," she said.

On that list are $8 billion in the second half of this year, $19 billion in 2014 and $18 billion in 2015.

"This will likely calm fears of large issuance by Rosneft," she said.

Meanwhile the company's 2022s underperformed those from OJSC Gazprom.

"The two have generally traded in line, and this news story seems a good opportunity to take advantage of small pricing dislocation," she said.

Chalco prices bonds

On Wednesday, Beijing-based metals manufacturer Aluminum Corp. of China Ltd. (Chalco) announced that it had priced on Tuesday - through wholly owned subsidiary Chalco Hong Kong Investment Co. Ltd. - a $350 million issue of 6 5/8% perpetual notes at par to yield 6 5/8%.

The notes were talked at a yield in the 6 5/8% area.

HSBC was the global coordinator. ANZ and Natixis were the joint leads for the Regulation S deal.

The proceeds will be used for general corporate purposes.

Deal from Dominican Republic

On Tuesday, the Dominican Republic priced a $500 million issue of 6.6% notes due 2024 at par to yield 6.6%, a market source said.

Citigroup was the bookrunner for the Rule 144A and Regulation S deal.

The proceeds will be used to finance infrastructure projects and to support other sectors of the economy.

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