EM bond funds see weekly inflows again; Maestro Peru, RHB Bank, BTG Pactual print notes

By Christine Van Dusen

Atlanta, Sept. 21 - Eurasian Development Bank, Malaysia's RHB Bank Bhd., Maestro Peru SA and Brazil's Banco BTG Pactual SA sold notes on Friday, ending a week that saw mixed trading and positive flows into emerging markets bond funds.

The funds saw inflows of $1.25 billion for the week, down from $1.64 billion the week before, according to a report from data tracker EPFR Global.

Still, the week ended Sept. 19 was the 15th straight for inflows.

"With the US Federal Reserve, European Central Bank and Bank of Japan all unveiling fresh stimulus programs since the beginning of September, the search for yield and tangible assets also kicked into higher gear," the report said. "Flows into emerging markets bond funds were more balanced, with hard, local and blend currency funds attracting roughly equal shares."

In its new deal, Banco BTG Pactual priced an $800 million issue of 5¾% tier 2 notes due Sept. 28, 2022 at 98.14 to yield 6%, a market source said.

The notes were talked at a yield in the 6 1/8% area.

Bradesco BBI, BTG Pactual, Citigroup and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal.

Hardware and home-improvement products retailer Maestro Peru priced $200 million 6¾% notes due Sept. 26, 2019 at par to yield 6¾%, a market source said.

The notes priced below talk, set at the 7 1/8% area, a market source said.

Bank of America Merrill Lynch and JPMorgan were the bookrunners for the Rule 144A and Regulation S notes, which include a make-whole call at 50 basis points.

Eurasian Development does deal

In another new deal, Kazakhstan-based lender Eurasian Development Bank priced a $500 million issue of 4.767% 10-year notes at par, according to a company release.

Citigroup Global Markets Ltd., BNP Paribas Securities Corp., HSBC Bank plc and VTB Capital plc managed the Rule 144A and Regulation S transaction.

The notes were issued under the company's $3.5 billion euro medium-term note program.

Malaysian lender RHB Bank priced a $200 million increase of its existing 3¼% notes due May 11, 2017 at 101.944 to yield 2.798%, or Treasuries plus 210 bps.

Bank of America Merrill Lynch, Goldman Sachs and RHB Bank were the bookrunners for the Regulation S deal.

The deal now totals $500 million.

Interbank prints notes

These new issues followed the late-Thursday pricing of Peruvian lender Interbank's $250 million add-on to its 5¾% notes due Oct. 7, 2022 at 106.25 to yield 4.8%, a market source said.

Bank of America Merrill Lynch and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The total size of the deal is now $650 million.

Asian lenders in demand

The final book was $7.5 billion from 240 investors for China-based Citic Bank International's new issue of $300 million 3 7/8% notes due Sept. 28, 2022, a market source said.

The notes came to the market at 99.284 to yield Treasuries plus 325 bps via HSBC, RBS, BBVA and Nomura in a Regulation S deal.

About 80% of the orders came from Asia and 20% from Europe. Funds took up 63%, banks 18%, private banks 14% and public institutions and insurers 5%.

Korea Exchange Bank's new $300 million 1¾% notes due Sept. 27, 2015 that priced at 99.843 to yield 1.804%, or Treasuries plus 155 bps, drew more than $4 billion in orders from about 170 investors.

Fantasia bonds oversubscribed

Also well received was the new $250 million issue of 13¾% notes due Sept. 27, 2017 from Chinese property developer Fantasia Holdings Group Co. Ltd.

The notes - priced at 99.472 to yield 13.9% with Bank of America Merrill Lynch, UBS and ICBC in a Regulation S deal - drew $1.5 billion orders from 118 investors.

About 91% of the orders came from Asia, 5% from Europe and 4% from the offshore United States.

Funds accounted for 40%, banks 26%, private banks 20% and others 4%.

Turkey notes keep falling

In trading, Turkey's new notes, which priced at par via Citigroup, HSBC and Kuwait Liquidity House, were quoted at 98.95 bid, 99.20 offered on Friday.

On Thursday the notes ended the day at 98.50 bid, 99 offered.

On the corporate side, Turkey's Isbank was on the market's mind as the lender considered issuing tier 2 capital.

"We believe Isbank is moving closer to GarantiBank metrics, leveraging on its built-up flexibility in terms of provisioning," a London-based analyst said. "Hence we continue to be more constructive on Isbank's 2016s versus GarantiBank's 2017s, which now trade roughly 20 bps through Isbank."

Africa, Middle East in focus

From South Africa, Investec Ltd.'s 2017 notes opened unchanged at 98.25 bid, 99.25 offered after pricing at 99.775.

And Namibia printed with a 113 handle on Friday.

"Those bonds are super well-placed," a trader said. "Senegal's notes were 122 bid. Nigeria is still doing well."

Looking to the Middle East, investors weren't paying much attention to many lower-beta names, a trader said.

"I'm surprised there's not more interest in BBK Bank, Burgan Bank and Tamweel, given the strength of lower-beta names," he said.

Ukraine notes 'slipped'

In other trading, the 2017 eurobonds from Ukraine have been slipping, said Svitlana Rusakova with Dragon Capital.

A $600 million tap of the 9¼% notes priced this week at 107.125 to yield 7.461%, or Treasuries plus 677.8 bps with JPMorgan, Morgan Stanley, Sberbank CIB and VTB Capital in a Rule 144A and Regulation S deal.

The original issue totaled $2 billion and priced at par on July 17 to yield Treasuries plus 863 bps.

The notes "slipped a bit" in trading, she said. "However, we didn't see many flippers after the bond was tapped."

Ukrainian paper has weakened a quarter-point to trade at about 106.75 bid, 107.75 offered. The sovereign's 2020s were seen at 101 bid, 102 offered, while its 2021s were quoted at 102 bid 103 offered.

"We saw further profit-taking in corporates with the most liquid names closing a point lower as attractive bids on broker screens were hit," she said.

Aleesia Forni contributed to this article.

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