Skysea, GPB sell notes as European news tightens spreads; Qatar notes eyed; Tamweel ahead

By Christine Van Dusen

Atlanta, Nov. 30 - Skysea International Capital Management and Russia's GPB Eurobond Finance plc sold notes on Wednesday amid tighter spreads spurred by the news that the central banks from several nations are banding together to provide cheaper funding for European lenders.

"Credit markets are loving it," a trader said. "November has come to an end and the supply taps have been turned on. The action by central banks today poured a little more kerosene on the already-simmering fire, and with S&P futures up 3.3% and U.S. Treasuries weaker, it's a pretty solid performance, all told, today."

The Markit iTraxx SovX index spread tightened Wednesday by 25 basis points.

"EM overall is trading well after decent buying yesterday afternoon, so despite the S&P bank downgrades and ongoing European malaise we are opening firm," a London-based trader said.

Among the bonds to get a boost on Wednesday were those on Turkey's long end and Russia's quasi-sovereigns. But the notes of most interest to emerging markets investors on Wednesday were Qatar's.

The sovereign on Tuesday priced a $5 billion issue of senior notes due 2017, 2022 and 2042 via Citigroup, HSBC, JPMorgan, Mitsubishi UFJ Securities, QNB Capital and Standard Chartered Bank in a Rule 144A and Regulation S transaction.

The deal included $2 billion 3 1/8% notes due 2017 that priced at 99.719 to yield 3.184%, $2 billion 4½% notes due 2022 that priced at 98.951 to yield 4.63% and $1 billion 5¾% notes due 2042 that priced at 98.928 to yield 5 7/8%.

"The new Qatar issue has been a big success, with the 2042s snapping 25 bps tighter while the 2022s have shown the most liquidity," a trader said. "The Qatar curve looks cheap now versus any other EM sovereign and will perform from here."

Qatar notes active

The Qatar notes were active in trading on Wednesday. The 2017s started the session at about 99.65 bid, 99.75 offered and then moved to 99.70 bid, 99.80 offered later in the morning. By the European afternoon, the notes were seen at 99.78 bid, 99.88 offered.

The 2022s started the day at 99.02 bid, 99.12 offered, then traded at 99.07 bid, 99.17 offered before trending toward 99.33 bid, 99.63 in the afternoon.

"The 2022s are doing a lot of work at 99 bid, 99.05 offered," a trader said. "We've seen solid two-way flow for the 2017s and 2022s."

The new 2042 notes opened Wednesday at 99 bid, 99.25 offered and later traded at 99.80 bid, 100.20 offered. During the afternoon the notes were seen at 100.79 bid, 101.29 offered.

"The inclusion of the very cheap 2042 tranche totally reprices the long end of their old curve down 8 points," another trader said. "It's the five-year notes that retail investors are going for, as you would expect."

Middle East in focus

By day's end, Qatar's 2042 notes were closing at 102 on the bid side, up 3 points, a trader said.

"This dragged the existing 2030s and 2040s off the lows after those two bonds have been forced to massively reprice on the back of the 2042 pricing," he said. "It took a while for the flow to get going here off the break, but come mid-morning and lunch it was very active and all hands to the pump, especially on the 2017s and 2022s with good Asian and European two-way interest."

Also from the Middle East, Abu Dhabi-based International Petroleum Investment Co. saw decent selling of its 2021s while its 2016s closed off the lows.

"The 2017s were trading two-way as well as the 2026s, which saw some good client interest this morning," he said, noting that the 2026s closed at 99.87 bid, 100.62 offered.

Bahrain traded well and Dubai was popular, with spreads 7 bps to 13 bps better.

Turkish lenders see buyers

Taking a closer look at Turkey's performance in the secondary market on Wednesday, better buying was seen for Garanti Bankasi AS' 2021s and Yapi Kredi's 2015s in small amounts, a trader said.

And Russia's quasi-sovereign banks stayed relatively solid.

"S&P may have the scythe out for global banks, but Russian banks are not feeling any fallout," he said.

Meanwhile, the Vimpelcom curve "ploughed on," he said.

In other trading, Kazakhstan's BTA Bank managed to rally, with bonds up 3 points in a delayed reaction to the news that sovereign wealth fund Samurk-Kaznya could extend a helping hand to the troubled lender.

"But nobody has asked me to offer paper yet, so I guess we need to see some hard cash first," a trader said.

Said another trader, "Away from focus areas like this and new issues, the level of interest in either direction remains muted. There may be more liquidity in money markets now, but a lot of EM credit remains illiquid."

Skysea, GPB print bonds

In its new deal, Skysea International Capital Management - a subsidiary of Hong Kong's Industrial and Commercial Bank of China Ltd. - priced a $750 million issue of 4 7/8% notes due Dec. 7, 2021 at 97.708 to yield Treasuries plus 310 bps, a market source said.

The notes were talked at the Treasuries plus 320 bps area.

Barclays Capital, HSBC, ICBC International, Standard Chartered and UBS were the bookrunners for the Regulation S deal.

And Russia's GPB Eurobond Finance priced a CHF 45 million tap of its 4 3/8% notes due Sept. 12, 2013 at par to yield 4 3/8%, or mid-swaps plus 429 bps, a market source said.

UBS, Barclays Capital and Gazprombank were the bookrunners for the Rule 144A and Regulation S deal, guaranteed by Moscow-based lender Gazprombank OJSC.

The original CHF 350 million issue priced on Nov. 10 at par.

Global Logistics revises talk

In other deal-related news, China-based Global Logistic Properties revised guidance for its planned issue of S$500 million perpetual notes to 5½%, a market source said.

The notes were initially talked at the mid- to high-5% area.

JPMorgan, Citigroup, Goldman Sachs and DBS are the bookrunners for the Regulation S notes.

Proceeds will be used for general funding purposes.

And Abu Dhabi's Tamweel PJSC is planning another roadshow for a possible issue of notes.

The real estate developer set out on a marketing trip in late September for a dollar-denominated offering that did not materialize. This time, the trip is being arranged by Citigroup, Dubai Islamic Bank and Standard Chartered Bank.

"So there's still supply out there as we have probably 2½ weeks left of liquidity, not to mention a United Arab Emirates holiday tomorrow and what will again be a lackluster Friday, most likely," a trader said.

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