Bank of China, Turk Ekonomi print notes as renewed European concerns make for mixed day for EM

By Christine Van Dusen

Atlanta, Oct. 31 - Bank of China (Hong Kong) Ltd. and Turkey-based Turk Ekonomi Bankasi sold notes as the euphoria over the European Union's debt deal wore off, making for a mixed Monday in emerging markets assets.

"A very mixed day, with once again emerging Europe, Middle East and Asia putting in a pretty good performance," a London-based trader said. "The only loser in EM was liquidity as the Street hides."

In trading, most of the focus was on Abu Dhabi-based International Petroleum Investment Co., which saw its curve marked lower by 1/8 to ¼ point, in line with broader market weakness.

"We're starting to see the curve flatten," a trader said in the morning. "Given broader market weakness, we are seeing classic last-in-first-out trading."

The investment company recently priced $1.5 billion of 3¾% notes due 2017 at 99.669; $1.5 billion 5½% notes due 2022 at 99.743 and $750 million 6 7/8% notes due 2041 at 99.097.

The 2017s were trading at 99.60 bid, 99.90 offered on Monday. The 2022s were seen at 98.90 bid, 99.20 offered. And the 2041s were trading at 99.375 bid, 99.875 offered.

By the afternoon, buying was seen for all three tranches.

"The 2041s remain cheap but need technicals to improve before they perform," a London trader said.

And by the close of trading, selling was reported for the notes.

"U.S. accounts continue to sell the new IPIC in classic last-in, first-out trading," he said. "The 10-year sector is underperforming as the 30-year starts to see more interest."

Bank of China sells bonds

In its new deal, Bank of China sold $750 million of 3¾% notes due Nov. 8, 2016 at 99.71 to yield 3.814%, or Treasuries plus 280 basis points, a market source said.

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

And Turkey-based lender Turk Ekonomi Bankasi priced a €75 million issue of notes due Nov. 4, 2023 at par to yield Euribor plus 475 bps via BNP.

This deal followed the Friday pricing of a $500 million issue of 5 3/8% notes due 2016 from Export Credit Bank of Turkey (Turk Eximbank).

Turk Eximbank's notes came to the market at 99.49 to yield Treasuries plus 437.5 bps via bookrunners Barclays Capital, Citigroup, Commerzbank and ING in a Rule 144A and Regulation S deal.

"The new Turk Exim deal got done and initially popped ¾ point before walking into a wall of selling," a London trader said at midday in Europe. "So it's back at reoffer now. Still, given its index eligibility and retail's love for Turkish banks, this deal will perform in time."

By the end of Monday's trading session, the notes were closing up 75 cents amid significant retail investor interest, he said.

ICE, EEB plan roadshows

In other deal-related news, Costa Rica-based electricity provider and telecommunications operator Instituto Costarricense de Electricidad (ICE) mandated Citigroup and Deutsche Bank for a possible dollar-denominated issue of notes that will be marketed on a roadshow starting Nov. 1, a market source said.

The roadshow for the Rule 144A and Regulation S offering will begin in New York and end in Boston.

And Colombia-based energy and fuel company Empresa de Energia de Bogota SA ESP (EEB) is planning a roadshow for its dollar-denominated issue of bonds, a market source said.

The marketing trip will begin Nov. 2 and travel through the United States, Europe and Latin America.

Deutsche Bank and Santander are the bookrunners for the Rule 144A and Regulation S deal.

Intercorp Retail on tap

Also from Latin America, Peru's Intercorp Retail is planning a roadshow for Nov. 2 to 4 for a dollar-denominated issue of notes, a market source said.

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

The marketing trip will begin in Bogota, Zurich and New York and travel to Lima, Geneva, London and Boston before wrapping up in Santiago, London and Los Angeles.

Intercorp Retail is a member of the Lima-based IFH Peru Ltd. group of companies, which focus on financial and commercial support services.

Skysea mandates bookrunners

Skysea International Capital Management - a subsidiary of Hong Kong's Industrial and Commercial Bank of China Ltd. (ICBC) - has mandated Barclays Capital, HSBC, ICBC International, Standard Chartered and UBS as bookrunners for a dollar-denominated issue of notes, a market source said.

A roadshow will be held from Nov. 1 to 2 in Hong Kong, Singapore, London and Switzerland.

And Abu Dhabi-based lender Union National Bank PJSC is expected to price its dollar-denominated issue of benchmark-sized notes due in November 2016 this week, a market source said.

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

"No price talk until tomorrow," a trader said.

ICBC oversubscribed

The final book for Industrial and Commercial Bank of China Ltd.'s recent issue of RMB 1.5 billion 6% notes due Nov. 4, 2021 was more than RMB 5.1 billion with 83 accounts involved, a market source said.

The notes priced Friday at par to yield 6% via bookrunners HSBC, ICBC International, Bank of China, Credit Suisse, DBS Bank and Goldman Sachs in a Regulation S deal.

About 77% of the orders came from Hong Kong and China, 9% from Singapore and 14% from Europe and others. Private banks accounted for 54%, insurers 20%, fund managers 11%, hedge funds 7% and others 8%.

The company's board of directors recently approved the planned issuance of up to RMB 70 billion of subordinated bonds with maturities of five years or longer.

Poland in demand

The final book for the Republic of Poland's recent $2 billion issue of 5% notes due March 23, 2022 was $8 billion, a market source said.

The notes priced Oct. 27 at 98.605 to yield 5.176%, or Treasuries plus 280 bps via Citigroup, Deutsche Bank and HSBC in a Securities and Exchange Commission-registered deal.

About 60% of the orders came from the United States, 15% from the United Kingdom, 11% from other areas of Europe, 9% from Poland and 5% from Asia.

Asset managers accounted for 76%, pensions and insurers 10%, central banks 4% and others 10%.

South Africa quiet

In other trading on Monday, bonds from South Africa were generally quiet while most of the Middle East and North Africa remained well supported, a trader said.

The recent deal from Namibia - $500 million 5½% notes due 2021 that priced to yield 5¾% - rallied 2 points, another trader said.

"That looks more like fair value," he said.

Russia's quasi-sovereigns were also relatively quiet, aside from weakness in Sberbank.

"Russia was quiet as retail investor demand prevents dealers from hitting bids there, except for Sberbank, which widened 20 bps," another trader said.

Russian corporates trade down

For Russian corporate names, most bonds were marked ½ to 1 point lower.

And Ukraine was fairly quiet at the start of the session. By the end of the day, the sovereign's bonds were 30 bps wider.

"But corporates continue to outperform the sovereigns, thanks to retail investor demand," a trader said.

Said another trader, "Ongoing U.S. interest prevents a major sell-off there."

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