Primary market picks up with Russia, South Africa, other bonds placed; EM spreads mixed

By Christine Van Dusen

Atlanta, Sept. 9 - Russia, South Africa, Singapore's Ezra Holdings Ltd., Thailand's PTT Exploration & Production PCL, Peru's Inkia Energy Ltd. and China ZhengTong Auto Services Holdings Ltd. placed bonds on a Monday with mixed spreads and some buying.

"Friday's non-farm payrolls numbers missed estimates at 169,000, helping to hold the 10-year Treasury below the big figure of 3%, although we're not seeing any meaningful pull-back," a London-based analyst said.

The Markit iTraxx SovX CEEME ex-EU index spread on Monday opened 29 basis points wider, at 284 bps over Treasuries. The Markit iTraxx Crossover index spread - seen Friday at 416 bps - narrowed to 407 bps on Monday.

"Central and emerging Europe, the Middle East and Asia are opening with a better tone and retail investor buying across the board," the analyst said. "Turkey sovereign cash, for example, is 1/8- to 1/4-point better."

Investors showed some interest in Turkish banking and corporate bonds as well as DPWorld's 2017s, which closed 9 bps better.

"Dubai Electricity and Water Authority's 2020s are trading between 111.75 and 112.25," he said. "Emirates Islamic Bank ticked a little higher, and we saw some demand for Government of Dubai paper."

Investors also nibbled at Saudi Electricity Co.'s 2043s, which have outperformed the 2022s and 2023s.

Some sovereign bonds from Latin America moved higher on Monday morning, following Friday's rally, a New York-based trader said.

But activity remained light, he said.

"The market looks to be consolidating a bit here, but it could be a little premature to make that claim right now," he said. "Argentina and Venezuela are super-quiet, but I would call them higher as well."

Venezuela's 2031s were trading at 89 5/8 flat. And Venezuela's 2026s were seen at 89.80 after closing Friday at 89¼ to 90.

Russia launches dollar notes

Russia launched a four-tranche issue of $6 billion due Sept. 16, 2019, 2023 and 2043.

The deal included $1.5 billion 2019 notes that launched at Treasuries plus 195 bps. The notes were talked at a spread in the 212.5 bps area.

The second tranche totaled $3 billion 10-year notes that launched at Treasuries plus 220 bps. The notes were talked at a spread in the 237.5 bps area.

Another $1.5 billion in notes, these due in 30 years, launched at Treasuries plus 220 bps. The notes were talked at a spread in the 237.5 bps area.

The deal also included €725 million 3 5/8% notes due 2020 that priced at 99.533 to yield mid-swaps plus 185 bps.

Barclays, Deutsche Bank, Gazprombank, Renaissance Capital, RBS and VTB Capital are the bookrunners for the Rule 144A and Regulation S deal.

South Africa places notes

South Africa launched a $2 billion issue of notes due in 2025 to yield Treasuries plus 315 bps, a market source said.

The notes were talked at a spread in the 330 bps area.

Deutsche Bank Securities Inc., Rand Merchant Bank and Standard Bank plc were the joint leads for the Securities and Exchange Commission-registered transaction. Investec Bank plc was the co-lead manager.

The proceeds will be used to repay maturing debt and for general corporate purposes.

New bonds trade well

Prior to pricing, South Africa's new issue traded well in the gray market, a trader said.

"The talk in the summer about new issues coming with new issue concessions and the secondary having to reprice has played out here," he said.

The sovereign's bonds gave back their gains from Thursday and Friday, closing as much as 25 bps wider, a trader said.

"South Africa is back with a 12-year dollar offering with a decent new issue concession that has seen Eskom and the sovereign move lower and wider," he said. "Eskom's 2021s are down at 97 on news of the new issue, closing at 95.75 bid, 96.50 offered, 30 bps wider."

PTTEP prints bonds

Thailand-based energy and exploration company PTTEP priced $500 million 3.707% five-year notes at par to yield Treasuries plus 200 bps, a market source said.

The notes priced tighter than talk, set at 205 bps over Treasuries.

Goldman Sachs, HSBC, Standard Chartered Bank and UBS were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Inkia prices notes

Peru's Inkia Energy priced a $150 million tap of its 8 3/8% notes due April 4, 2021 at 104.75 to yield 7.537%, a market source said.

The notes were talked at a price in the 104.25 area.

BofA Merrill Lynch and Credit Suisse were the bookrunners for the Rule 144A and Regulation S deal.

The notes will be callable on April 4, 2016 and include a change-of-control put at 101%.

Inkia Energy is a power generation services company based in Lima.

Issuance from ZhengTong

China ZhengTong Auto Services priced a $335 million issue of 4½% five-year notes at 99.748 to yield 4.561%, or Treasuries plus 285 bps.

The notes priced at the tight end of talk, set at 285 bps to 295 bps.

JPMorgan, Bank of China and Credit Suisse were the joint bookrunners and joint lead managers. JPMorgan acted as the global coordinator.

Proceeds from the Regulation S offering will be used to repay a portion of the company's bridge loans.

The auto dealership group is based in Beijing.

Ukraine bonds bounce

Ukraine bonds were able to bounce after the release of Friday's payrolls numbers from the United States, said Svitlana Rusakova of Dragon Capital.

"The sovereign was going weaker in jittery trade ahead of U.S. jobs data, with the Ukraine 2017s and 2023s outperforming as usual," she said. "But the 2020s and 2021s were hit and repriced lower."

The bonds rebounded after the data was released, but trading activity was limited.

"Corporates saw a broadly unchanged pattern, with private issuers' bonds supported by quasi-sovereigns heavy," she said.

Gazprom roadshow ahead

Russia's OJSC Gazprom will set out on Sept. 15 for a roadshow to market a sterling-denominated issue of notes, a market source said.

No other details were immediately available on Monday.

Gazprom is a Moscow-based natural gas producer.

"There are still some questions about how much supply EM wants to absorb, given that some funds are still predicting further outflows," the analyst said.

Al Hilal deal on deck

Abu Dhabi-based Al Hilal Bank is looking to price a dollar-denominated issue of Islamic bonds this year, a market source said.

HSBC, Standard Chartered Bank, Citigroup and National Bank of Abu Dhabi are the bookrunners for the Regulation S deal.

"There's no paper from this name out in the market, so it would be sure to be popular with regional players not having any exposure to that credit," the London trader said.

Ezra sets talk

Singapore-based Ezra Holdings set price talk in the par area for a tap of its Singapore dollar-denominated 5% notes due Sept. 7, 2015, a market source said.

The original issue totaled S$200 million.

ANZ is the bookrunner for the Regulation S issue, which had not priced by Monday evening.

Ematum oversubscribed

Mozambique-based Ematum's recent $500 million 6.305% notes due Sept. 11, 2020 were oversubscribed, a market source said.

About 45% of the orders went to the United Kingdom, 24% to the offshore United States, 18% to Europe and 13% to others.

Funds picked up 66%, banks 21% and others 13%.

The notes, via BNP Paribas and Credit Suisse, priced at 92.051 to yield 8½% in a Regulation S-only deal.

On Monday the bonds closed at 91.12 bid, 91.62 offered.

"Not exactly setting the world on fire," a trader said, adding there were retail sellers.

© 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.