Colombia's EEB sells bonds as EM stays solid amid global economic turmoil; Bond inflows up

By Christine Van Dusen

Atlanta, Nov. 4 - Colombia's Empresa de Energia de Bogota SA ESP (EEB) sold notes on a Friday that brought to a close a fairly strong week for emerging markets debt, even as the tumult in Greece made for a hectic and topsy-turvy week for the markets at large.

"You have to hand it to the EM market that once again sees through all the noise and retains a great bid," a London-based trader said on Friday morning. "We can reflect on a market in good shape. New issues are getting done and spreads are all firming up."

By the afternoon, trading activity had all but stopped, he said.

"With so many holidays in the region and after a hectic week, the market has basically ground to a halt, aside from the bonds that are being squeezed," he said.

In trading on Friday, the most popular notes were those from Abu Dhabi's International Petroleum Investment Co. Selling was seen for the 2015s and 2022s, and buyers were reported for IPIC's 2041s.

The oil investment entity on Oct. 28 priced a three-tranche issue of $3.75 billion notes. The deal included $1.5 billion of 3¾% notes due 2017 that priced at 99.669; $1.5 billion 5½% notes due 2022 that priced at 99.743; and $750 million 6 7/8% notes due 2041 that priced at 99.097.

The 2017 notes were trading Friday at 99.65 bid, 100.15 offered while the 2022s were seen at 99.65 bid, 100.15 offered. The 2041s were trading at 101.15 bid, 101.65 offered.

"They're now the hottest ticket in town," the London trader said.

On the deal-related front, Ecuador's Banco Pichincha was considering an issue of notes while Brazil was planning a tap of its bonds due 2041. And the Republic of Lebanon and Toronto-based and Colombia-focused Pacific Rubiales Energy Corp. mandated bookrunners.

In other news, inflows into emerging markets bond funds hit an eight-week high at $671 million for the week ended Nov. 2, according to data tracker EPFR Global.

EEB does deal

In its new deal, Colombia-based energy and fuel company EEB sold $610 million notes due Nov. 10, 2021 at par to yield 6 1/8%, a market source said.

Deutsche Bank and Santander were the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for five years.

The proceeds will be used to prepay EEB International's $610 million of outstanding 8¾% notes due in 2014.

Also from Latin America, Ecuador-based lender Banco Pichincha is considering an issue of $100 million bonds, a market source said.

No other details were immediately available on Friday.

Brazil plans add-on

Friday also saw Brazil planning a tap of its 5 5/8% notes due Jan. 7, 2041, according to a filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch and Barclays Capital are the bookrunners for the notes, which will include a make-whole call at par.

The notes will be consolidated with the sovereign's existing $1.835 billion notes issued on Oct. 7, 2009 and Sept. 21, 2010.

Proceeds will be used for general budgetary purposes.

Pacific Rubiales taps dealers

In other deal-related news, Toronto-based and Colombia-focused oil and gas company Pacific Rubiales Energy has mandated Bank of America Merrill Lynch for a roadshow from Monday to Nov. 11, a market source said.

The roadshow will begin in London and travel to Santiago, Chile; New York, Lima, Peru; Boston, Bogota, Colombia; Los Angeles and Toronto before concluding in Bogota, Zurich and Geneva.

And Lebanon mandated Deutsche Bank, Fransa Bank and Standard Chartered Bank for up to $2 billion of bonds for 2012, a market source said.

No other details were immediately available on Friday.

UNB trades better

In trading, the new issue of notes from Abu Dhabi-based lender Union National Bank PJSC was trading better after Thursday's initial flipping, a trader said.

"This makes sense, as it's rare to see a sukuk offering any value," he said.

The $400 million issue of 3 7/8% notes due 2016 priced Nov. 2 at 99.05 to yield 4.087%.

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

Other trading mixed

Good buying was also noted for Russia's quasi-sovereign banks and Turkey's banks while the Turkey's sovereign bonds had a slow start, a trader said.

"Ukraine is still the laggard, at 20 bps wider, as the International Monetary Fund departs Ukraine with no resumption in lending, although official statements are all supportive, medium-term," he said. "Ukraine corporates are trading well, though."

Bond fund inflows climb

Net inflows into emerging markets bond funds hit $671 million for the week ended Nov. 2, according to data tracker EPFR Global.

"Flows into emerging market bond funds climbed to an eight-week high," EPFR said in a report.

Funds with a hard currency mandated accounted for $520 million of the weekly inflows and saw their best week since early April.

Outflows from Europe-focused bond funds slowed during the week, falling to an eight-week low of $230 million. And Europe, Middle East and Asia bond funds ended an 18-week outflow streak, EPFR said.

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