Vakifbank, International Container sell notes; blizzard watch, oil prices affect sentiment

By Christine Van Dusen

Atlanta, Jan. 26 – Turkey’s Turkiye Vakiflar Bankasi TAO (Vakifbank) and Philippines-based International Container Terminal Services Inc. sold notes on Monday as oil prices declined, violence increased in Ukraine and news reports warned that a huge blizzard would soon hit the northeastern United States.

Also on Monday, emerging markets investors took the election results in Greece in stride.

“The market reaction [to the Greek election] has been relatively contained so far; the result was largely anticipated,” a London-based analyst said. “U.S. Treasuries gave up some gains after a brief rally, first thing.”

Ukraine and Russia remained under pressure amid rocket attacks in Mariupol and the U.S weighed further sanctions against the latter sovereign.

“There will be an emergency foreign minister meeting on Thursday to discuss the situation,” the analyst said. “Our view would be that it will remain hard for Europe to tighten sanctions due to a lack of agreement between members, but the possibility of the U.S. increasing sanctions is much more real.”

In response to this and lower oil prices, Russian credit default swaps spreads widened 35 basis points on Monday morning while oil and gas bonds moved 20 bps to 25 bps wider, he said.

Later in the session, Russian bonds came under further pressure on the news that Standard & Poor’s had downgraded the Russian Federation’s ratings to junk.

In deal-related news on Monday, Tunisia set talk in the 6% area for its upcoming issue of about $750 million of notes due in 10 years, a market source said.

Citigroup, JPMorgan and Natixis Securities are the joint lead managers for the Rule 144A and Regulation S deal.

“Their 2027s and 2020s existing don’t really trade anymore, so this is a welcome addition,” a trader said.

GarantiBank seeks issuance

Turkey’s GarantiBank International NV has applied to issue up to $6 billion of bonds, a market source said.

No other details were immediately available on Monday.

The issuer is a lender based in Istanbul.

Asia in focus

Asian bonds put in a quiet London session on Monday, with spreads for high-grade names widening between 2 bps and 5 bps from Friday’s close, a trader said.

The new issue from Haitong International Securities Group Ltd. – $700 million 4.2% notes due 2020 that priced at 98.591 to yield Treasuries plus 310 bps – undulated before closing at Treasuries plus 305 bps bid, 300 bps offered.

Deutsche Bank, Haitong International, HSBC and Huatai Financial were the bookrunners for the Regulation S deal.

“Korean names were unchanged to 1 bp to 2 bps wider,” he said. “The Indian space was mixed.”

Icici Bank widens

India’s Icici Bank Ltd. saw its 2020 bonds move a few basis points wider, a trader said.

Among Asian sovereigns, Philippines and Indonesia rode the rally in Treasuries but lost some momentum after the London open, he said.

“The long end of the Indonesia curve was about a ½ point higher when Indonesia’s 2045 traded to a new high of 106 1/8,” he said. “But profit-taking pushed the bond lower, to close at 105 5/8 bid, 108 7/8 offered.”

Philippines bonds move higher

Long-dated Philippines bonds moved 1/8 point to ¼ point higher, with the 2034s trading up at 141¼, a trader said.

The sovereign’s recent issue of 3.95% notes due 2040 that priced par to yield 3.95%, or Treasuries plus 142.3 bps, traded up at 108 7/8, then 108¾ before closing at 108 5/8 bid, 108 7/8 offered on Monday.

Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Standard Chartered Bank and UBS were the bookrunners for the Securities and Exchange Commission-registered deal.

Kaisa in focus

Bonds from China-based Kaisa Group moved higher by 3 points to 5 points on Monday as Sunac China Holdings Ltd. considered buying a stake, a trader said.

Kaisa is under investigation for ties to an allegedly corrupt Shenzhen official.

Kaisa has also been in talks with China Vanke Co. and Shenzhen Overseas Chinese Town Co.

In general, the sector was quiet, and moved lower by ¼ point to ½ point, he said.

European spreads widen

From Central and emerging Europe, spreads opened on Monday about 3 bps wider on the move in Treasuries, the analyst said.

“The Greece news is having a limited effect,” he said.

Turkey’s credit default swaps spreads moved 2 bps wider.

Middle East mixed

Looking to the Middle East, bonds were mixed on Monday morning, with some spreads tightening in spite of the Treasury move and lower oil prices, the analyst said.

“Generally, investment grade paper continues to outperform high yield,” he said.

The perpetual notes from Dubai Islamic Bank PJSC were outperformers on Monday morning after the lender put out solid earnings results for fiscal 2014, beating estimates.

“We also saw comments out of Saudi Arabia on Friday from King Salman that he would maintain his predecessor’s policies,” he said.

Spreads continued to tighten during a quieter afternoon for Middle Eastern bonds, a trader said.

Sellers emerged for names like Emaar Properties’ 2019s and Jebel Ali Free Zone’s 2019s, he said. And buyers surfaced for 10-year names from Dubai.

“The street was long and short the same names again, in may instances,” he said. “Etisalat is still popular, as are most investment grade and low-beta names.”

Vakifbank prices notes

In its new deal, Istanbul-based lender Vakifbank sold $500 million 6 7/8% notes due Feb. 3, 2025 at 99.687 to yield 6.95%, a syndicate source said.

The notes were talked at a yield in the 7% area.

BofA Merrill Lynch and Standard Chartered Bank were the joint structuring advisers and joint lead managers. Citigroup, Deutsche Bank, Goldman Sachs and HSBC were the joint lead managers for the Rule 144A and Regulation S deal.

ICTS prints add-on

Philippines-based International Container Terminal Services – through subsidiary ICTSI Treasury BV – priced a $117.498 million add-on to its 5 7/8% notes due in 2025 at 102.625, according to a company announcement.

HSBC and Citigroup were the bookrunners for the deal.

The new notes form a single series with the $282.502 million notes due 2025 that priced on Sept. 17 and April 30 of 2014.

International Container is a Manila-based port operator.

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