IPIC sells notes in three parts amid geopolitical woes; Russian Agricultural Bank on tap

By Christine Van Dusen

Atlanta, March 9 - Abu Dhabi's International Petroleum Investment Co. sold notes on Wednesday as the overall tone of the market remained solid but while risk assets had a mixed session. Market participants were on guard for climbing oil prices and continued unrest in Libya.

"It's been a mixed bag all told; however, the tone has felt fairly supportive," a London-based trader said.

Also part of the day's backdrop was a continued focus on the euro zone as European leaders prepare to meet to discuss policy strengthening measures in an effort to avoid another sovereign debt crisis and help solve the current problem before the end of the month.

"The mood globally was generally modestly risk-averse, partly reflecting investor caution amid newswires reporting disruptions at Libyan oil facilities, and some re-emerging unease over the euro zone periphery's funding outlook," according to an RBC Capital Markets report.

Wednesday also saw Moscow-based lender OJSC Russian Agricultural Bank take a step toward the market, while Hong Kong-based Sunac China Holdings Ltd. canceled its plans for a deal.

The JPMorgan Emerging Markets Bond Index Plus spread closed Wednesday 5 basis points wider at Treasuries plus 245 bps.

IPIC sells notes

Oil industry investment entity International Petroleum Investment priced a three-tranche issue of sterling- and euro-denominated notes due 2026, 2016 and 2021 in a Regulation S-only transaction, a market source said.

The deal included £550 million 6 7/8% notes due March 14, 2026 at 99.506 to yield Gilts plus 270 bps, in line with talk of Gilts plus the 275 bps area.

The deal also included €1.25 billion 4 7/8% notes due March 14, 2016 that priced at 99.379 to yield OBL plus 244.8 bps. That tranche was talked in the OBL plus low 200 bps area.

The company also priced €1.25 billion 5 7/8% notes due March 14, 2021 at 98.737 to yield DBR plus 276 bps, in line with talk of DBR plus the mid- to high-200 bps area.

Goldman Sachs, Banco Santander, BNP Paribas, Credit Agricole, Deutsche Bank and UniCredit were the bookrunners for the notes, which include a change-of-control put at par if the government ceases to own 100%.

"These are chunky deals," the London-based trader said. "I suspect there will be some loose bonds floating around initially; however, over time I would think these deals will get placed."

IPIC bonds fairly active

IPIC's existing 2015 bonds were seen at 96.62 bid, 97.12 offered after trading at 96.50 bid, 96.75 offered on Tuesday. The 2020s were quoted at 95.75 bid, 96 offered after Tuesday's levels of 95.65 bid, 95.90 offered.

"There are sellers around the existing bonds," the trader said.

In other trading on Wednesday, Bahrain's 2020 notes were seen at 94.50 bid, 95.25 offered during the early European morning. Later the notes traded at 94.62 bid, 95.37 offered. On Tuesday the notes were seen at 93.50 bid, 94.25 offered.

Dubai-based developer Emaar Properties' 2016 bonds were seen at 97.56 bid, 98.06 offered early in the day, then 97.62 bid, 98.12 offered after trading at 97.37 bid, 97.87 offered on Tuesday.

And the Emirate of Ras Al Khaimah's bonds were again "very solid," the trader said.

DEWA, Morocco see sellers

A market source also noted some movement for Dubai Water and Electricity Authority, which on Wednesday saw Fitch Ratings withdraw its ratings of the company.

"Bids are pulling back a little in the street. The 2020 dollar bonds are now at 94.75 bid, 95.25 offered," he said. "We've seen some smart selling reaction to the news, but generally DEWA and Dubai trade pretty well."

He also saw better sellers for Morocco's 2020 notes at 90.30. The deal priced in September at 99.495 to yield 4.563%. On Wednesday the notes were trading at 90.00 bid, 90.50 offered.

Middle East names get support

The London trader also saw "decent support" for Dubai, Abu Dhabi Islamic Bank and Qatar Islamic Bank.

"The latter is only 8 bps wider on the month and holding exceedingly well," he said. "Once again the sukuk buyers were out in force."

He was also watching Qatar's Qtel International.

"There remains some sponsorship for Qtel paper, with the 2016 dollar notes now with a 95 handle or 30 bps tighter on the week," the trader said. "The 2025 dollar notes closed at 88.75 bid, or 10 bps tighter on the week."

In looking at sovereign spreads, Latin American names were performing well, he said.

"But you can basically throw a tea towel over Qatar, Abu Dhabi, Russia, Poland and South Africa," he said.

Russian bank whispers notes

Moscow-based lender Russian Agricultural Bank whispered its planned issue of ruble-denominated notes due 2016 at the mid- to high-8% area, a market source said.

Pricing is expected to take place on Thursday.

Deutsche Bank, JPMorgan and VTB Capital are the bookrunners for the Regulation S deal.

The bank is set to be the second issuer to tap the "euro-ruble market" following the Feb. 24 pricing by Russia of RUB 40 billion notes due 2018 at par to yield 7.85%.

"The currency is seen as strong by investors, and there is a gross pick-up of around 3% to U.S. issues," a London-based market source said. Russian Agricultural Bank "is a 100% sovereign-owned and controlled bond and in domestic bonds trades at approximately 150 bps over the sovereign."

The new issue looks like it will trade at about 125 bps to 150 bps over the sovereign, he said. "Demand for the currency and the solid credit should ensure this works well."

Sunac cancels plans

Hong Kong-based property developer Sunac China Holdings has canceled its roadshow for a planned dollar-denominated issue of notes due 2016, according to a company announcement.

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

Proceeds were to be used to finance new land bank acquisitions and for general corporate purposes.

And the final book for Slovenia-based lender Slovene Export and Development Bank (Sid Banka)'s €350 million tap of its 3% notes due April 21, 2015 exceeded €430 million, a market source said.

The deal priced Monday via Deutsche Bank, HSBC and Unicredit at 96.675 to yield mid-swaps plus 103 bps, in line with talk.

About 59% came from Germany and Austria, 26% from Slovenia, 13% from Belgium and 2% from others.

The original issue totaled €750 million and priced in April 2010 at 99.835.

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