Coelba, Evraz price; spreads widen, but risk appetite remains; Alfa Bank, Senegal deals ahead

By Christine Van Dusen

Atlanta, April 19 - After Standard & Poor's revised the outlook on the United States' credit rating to negative from stable - and as concerns continued about Greece and its debt restructuring - spreads widened on Tuesday, but emerging markets assets stayed surprisingly resilient.

The primary market also saw a little bit of action. Brazil's Companhia de Electricidade do Estado da Bahia (Coelba) and Russia-based steel and mining company Evraz Group SA sold notes.

"Standard & Poor's decision ... has been the main factor driving price action," according to a report from RBC Capital Markets. "Speculation of a Greek debt restructuring has persisted but, despite weakness during the Asia morning, risk markets have stabilised in Europe."

Prices firmer

Though the JPMorgan Emerging Markets Bond Index Plus spread widened in the morning, risk sentiment remained fairly positive, a market source said.

"Prices are actually opening marginally firmer today for the first time in a week," he said. "The market is not screaming but encouraged by stronger equities, better-than-expected numbers from Goldman Sachs and a sense of calm about the pending Greece default. Clients have put some cash to work."

By the end of the New York session, the EMBI+ spread was two basis points tighter, with most sovereigns wider or tighter by 5 bps. Ukraine stood out at 19 bps tighter, and Peru was 4 bps wider.

"We may see some recovery attempts unless E.U. peripheries start weighing down the market again," a London-based trader said.

Coelba, Evraz sell bonds

In its new deal, Brazil's Coelba sold R$400 million of senior notes due April 27, 2016 at par to yield 11¾%, a market source said.

The notes priced in line with talk, which was set at the 11¾% area.

BB Securities, BNP Paribas and Itau were the bookrunners for the Rule 144A and Regulation S transaction.

Also on Tuesday, Evraz Group sold $850 million of notes due April 27, 2018 at par to yield 6¾%, a market source said.

The notes priced at the high end of talk, which was set at 6 5/8% to 6¾%.

Goldman Sachs, ING and VTB Capital were the bookrunners for the Rule 144A and Regulation S deal.

Evraz in focus

Market-watchers were particularly interested in the Evraz deal, along with the planned notes from fellow Russian corporate issuer Alfa Bank.

Evraz had talked its planned issue of up to $1 billion with a 6.7% to 7% yield before tightening guidance to the 6 5/8% to 6¾% range.

"This removed the earlier gray market premium," a source said.

Said the London trader: "If you adjust the current 2018 dollar notes for the premium cash price, they would yield 6 3/8%, so it seems you get a healthy premium. It's just that the whole sector is so rich for single-B risk."

Alfa, Hana set guidance

Alfa Bank, which previously whispered its benchmark-sized notes due 2021 at the 8% area, set guidance at 7 7/8% to 8% on Tuesday. Goldman Sachs, UBS and Alfa Bank are the bookrunners for the Rule 144A and Regulation S deal.

"Compared to the Alfa curve, the new issue is optically cheap. It also looks like a good pick-up versus VTB Bank's 2020s," a source said. "It looks like Alfa is squeezing out a lot of the new issue premium."

Alfa's notes were seen trading up a quarter point in the gray market.

Also whispering guidance on Tuesday: South Korea-based Hana Bank, for its dollar-denominated benchmark-sized 5.5-year notes. The deal is being whispered at a yield in the Treasuries plus low 200 bps area, a market source said.

Barclays Capital, Citigroup, Hana Daetoo Securities, HSBC and Standard Chartered are the bookrunners for the notes, which are expected to price this week.

Senegal taps bookrunners

In other deal-related news on Tuesday, the Republic of Senegal mandated Standard Bank and Standard Chartered Bank for a roadshow to market a dollar-denominated offering of benchmark-sized notes, a market source said.

The marketing trip for the Rule 144A and Regulation S deal will commence April 26.

"Senegal has clearly managed to negotiate more room to issue from the IMF as they look to return to international markets, capitalizing on the eventual performance of their inaugural 2014 dollar bonds," a source said. "This will provide a good alternative to the current Russian new issue fare."

And Hong Kong-based Wharf Finance Ltd. - part of Wharf (Holdings) Ltd., a property and infrastructure developer - whispered its planned dollar-denominated issue of benchmark-sized notes due 2021 at the Treasuries plus mid-200 bps area, a market source said.

UBS is the bookrunner for the Regulation S-only transaction.

Proceeds will be used for general corporate purposes.

CNPC talks notes

Also on Tuesday, Beijing-based oil and gas supplier China National Petroleum Corp. set price talk for its three-tranche issue of dollar-denominated benchmark-sized notes due 2016, 2021 and 2041, a market source said.

The five-year notes were talked at the Treasuries plus 120 bps to 125 bps area. The 10-year notes were talked at Treasuries plus 140 bps. And the 30-year notes were talked at a spread of 165 bps over Treasuries.

Citigroup, Standard Chartered, ICBC, BOCI, Merrill Lynch, Deutsche Bank and HSBC are the bookrunners for the Rule 144A and Regulation S notes, which are expected to price this week.

And Argentina-based electricity producer Empresa Distribuidora y Comercializadora Norte SA (Edenor) mandated JPMorgan and Deutsche Bank for a $69.7 million tap of its existing 9¾% notes due Oct. 25, 2022, a market source said.

The original $140 million issue priced Oct. 15, 2010 at par to yield 9¾% in a Rule 144A and Regulation S deal.

Better selling for Turk banks

In trading, Turkey again opened roughly unchanged and then was better bid. From the country's banking sector, demand was seen for Akbank TAS' 2018s, Turkiye Is Bankasi AS' 2016s and Turkiye Garanti Bankasi AS' 2021s.

"We traded some Garanti 21s with retail and are left better sellers of it," the London-based trader said.

Abu Dhabi was a standout on Tuesday, a market source said.

"Abu Dhabi remains a star performer as locals come in to buy the new Mubadala, which in turn supports International Petroleum Investment Co.," he said.

Abu Dhabi-based investment vehicle Mubadala priced a $1.5 billion two-tranche issue of notes due 2016 and 2021 on April 13.

The $750 million of 3¾% notes due 2016 priced at 98.975 to yield Treasuries plus 180 bps. Those notes were trading Tuesday at 99.4 bid, 99.6 offered.

The other tranche was $750 million of 5½% notes due 2021, which came to market at 99.484 to yield Treasuries plus 210 bps. On Tuesday, the notes were seen at 100.2 bid, 100.4 offered.

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