Issuance from America Movil; Russian bonds see some gains; Azerbaijan bank looks to issue

By Christine Van Dusen

Atlanta, May 28 - Mexico's America Movil SAB de CV sold notes on Wednesday as bonds from Russia rose in trading and Kuwait's Burgan Bank underperformed.

"The market rallied yesterday, cheering Petro Poroshenko's presidential victory," said Svitlana Rusakova of Dragon Capital. "The gains, however, were kept in check by the ongoing anti-terrorist operation in the Donetsk and Lugansk regions and concerns about possible Russian reaction."

Even so, Russian bonds have added 1 point to 1½ points so far this week while quasi-sovereigns and corporates have risen a ½ point to 1 point, she said.

"Ukraine and Russia remain in the spotlight, with Kiev regaining control of Donetsk's airport from pro-Russia militants who issued a formal written request for Putin's support," a London-based analyst said. "There has been no action from the Kremlin but a call for peace and non-violence in accordance with the Geneva agreement. Gas talks between Russia and Ukraine seem to have not progressed much either."

Meanwhile, the broader market opened "marginally better" on Wednesday, with Russian banks mostly unchanged, she said.

"Flows remain positive, with some accounts covering underweight positions," she said. "Retail is buying."

Some demand was noted for Sberbank's 2022s and JSC VTB Bank's 2022s, which had lagged during previous weeks.

Also on Wednesday, Kuwait-based Burgan Bank was an underperformer, with its 2020 bonds lagging and widening on the month, a trader said.

"While at first glance, spreads look a little wider," he said. "The tone was set this morning when I had multiple accounts check me on Dubai 2023. Printed at 101 1/8 mid-morning, a new all-time high on that bond, having printed sub-88 in September of last year."

GEMS bond sees action

The recent issue of notes from the United Arab Emirates' Global Education Management Systems Ltd. - 12% perpetual notes that priced at par - was "nicely off the high and feels heavy in the Street," a trader said.

Saudi Arabia-based Dar Al-Arkan Real Estate Development Co.'s 6½% Islamic bonds due 2019, which priced at 98.953, traded Wednesday at 100¼ bid 101 offered.

Dubai-based Jebel Ali Free Zone's (Jafza) 7% notes due 2019 traded Wednesday at 115.12 bid, 115.62 offered after pricing at par.

And Kuwait Projects Co.'s (Kipco) 4.8% notes due 2019 that priced at par were spotted at 105 bid, 105¾ offered.

Africa in focus

From Africa, Gabon's 6 3/8% notes due 2024 that priced at par traded Wednesday at 109¼ bid, 110¼ offered, a trader said.

Citigroup, Deutsche Bank and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

Morocco's 4¼% notes due 2022 that priced at 100.263 moved to par bid, 100¾ offered while its 2042 notes - which carried a 5½% coupon and priced at 97.464 - moved to 99½ bid, 100½ offered.

Barclays, BNP Paribas, Citigroup and Natixis were the bookrunners for the Rule 144A and Regulation S deal.

Hungary weakens

In other trading, bonds from Hungary have seen weaker trading, according to a report from Erste Group Research.

"The selling in [Hungarian] assets could be attributed to profit taking, which we also have seen taking place in other local [emerging] markets such as Romania, Poland and Croatia in the last trading days," the report said. "Nevertheless, the bullish sentiment continues to dominate in our markets."

Movil prints notes

In its new deal, Mexico-based telecommunications company America Movil sold €600 million 1% notes due June 4, 2018 at 99.677 to yield 1.083%, according to a company filing.

Banca IMI, BBVA and Societe Generale CIB were the bookrunners for the Securities and Exchange Commission-registered deal. BNP Paribas was the co-manager.

The proceeds will be used for general corporate purposes.

Otherwise, the primary market was mostly quiet on Wednesday, and investors were "craving some supply," a trader said.

He was keeping an eye out for the upcoming issue from Abu Dhabi's Etisalat, which will soon kick off a roadshow.

"There should be decent demand on this name," he said.

Azerbaijan bank plans issuance

International Bank of Azerbaijan is looking to issue three-year bonds, a market source said.

The notes will include a put option that can be exercised if the government, which is the majority shareholder, ceases to control 50% plus one share of the company, according to a report from Fitch Ratings.

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