Maquinaria prints bonds; sentiment lifts but volumes stay light; Mubadala, Alfa Bank eyed

By Christine Van Dusen

Atlanta, April 21 - Mexico-based Maquinaria Especializada MXO Trust sold notes on an upbeat Thursday for emerging markets assets as positive earnings reports from the United States boosted risk appetite.

"Positive sentiment to risk has persisted," according to a report from RBC Capital Markets.

Said a London-based market source: "There's now a very positive mood across the board, and you can feel the sense of relief all around."

Still, with the Easter holiday on the horizon, volumes remained somewhat thin. In trading, Abu Dhabi's Mubadala Development Co. PJSC continued to see demand, as did Russia-based lender Alfa Bank and Turkey's Turkiye Garanti Bankasi AS (GarantiBank).

Maquinaria sells notes

In its new deal, Mexico-based special purpose vehicle Maquinaria Especializada priced $160 million 9.652% notes due 2021 at 99.89 to yield 9¾%, a market source said.

Santander was the bookrunner for the Rule 144A and Regulation S transaction.

This followed the October cancellation of a similar offering due to a scheduling conflict.

Maquinaria Especializada provides construction machinery services to Mexico City-based homebuilder Corporacion GEO.

Also from Latin America, Brazil-based vehicle rental company Localiza Rent a Car has canceled plans for an international offering of real-denominated notes due to market conditions, a market source said.

Merrill Lynch, Bradesco BBI, Citigroup and Itau were the bookrunners for the planned notes, which were marketed on a roadshow from March 10 to March 15.

CNPC prints bonds

In another new deal, China National Petroleum Corp. sold $1.85 billion of notes due 2016, 2021 and 2041 via seven bookrunners on Wednesday.

The $700 million 3 1/8% notes due April 28, 2016 priced at 99.968 to yield 3.351%, or Treasuries plus 123 basis points. The notes were talked at the Treasuries plus 120 bps to 125 bps area.

The $650 million 4½% notes due April 28, 2021 priced at 97.71 to yield 4.79%, or Treasuries plus 138 bps, below talk of Treasuries plus 140 bps.

The $500 million 5.95% notes due April 28, 2041 - which were talked at Treasuries plus 165 bps - priced at 97.812 to yield 6.11%, or Treasuries plus 163 bps.

Citigroup, Standard Chartered, ICBC, BOCI, Merrill Lynch, Deutsche Bank and HSBC were the bookrunners for the Rule 144A and Regulation S notes.

Mubadala in demand

In trading, the new 3¾% notes due April 20, 2016 from Mubadala - which came to the market at 98.975 to yield Treasuries plus 180 bps via Barclays Capital, HSBC, National Bank of Abu Dhabi, Societe Generale and Standard Chartered - were seen at 99.65 bid, 99.85 offered on Thursday.

"That's still the favorite bond," a London-based trader said. "But we've also seen good two-way interest on the 2021s."

Those notes, which priced with a 5½% coupon at 99.484 to yield Treasuries plus 210 bps, were trading at 100.25 bid, 100.50 offered on Thursday.

"The region has been very firm on the back of oil being up $6 in the last two days," a market source said. "We've seen very good demand for International Petroleum Investment Co., Mubadala and Qatar."

Alfa Bank in focus

Looking to Russia, the recent notes from Alfa Bank opened a touch higher on Thursday.

The $1 billion issue of notes due April 28, 2021 priced this week at par to yield 7¾% via Goldman Sachs, UBS and Alfa Bank.

"We're seeing some very strong retail demand for the Alfa 21s," the London trader said. "We are left better sellers of it."

Meanwhile, the $850 million issue of notes due April 27, 2018 from Russia's Evraz Group SA - which priced at par to yield 6¾% with Goldman Sachs, ING and VTB Capital - were lagging at 100.20.

"But Alfa is moving along nicely," a market source said.

Nigeria sees profit-taking

In Africa, some profit-taking was noted for Nigeria, which saw its 6¾% notes due 2021 trading at 103.30 bid, 103.80.

Senegal, which is expected to issue benchmark-sized dollar bonds in May in a Rule 144A and Regulation S deal, saw its existing 8¾% 2014 notes trading at 103.50 bid, 104.50 offered.

Turkey opened firmer after Moody's Investors Service moved GarantiBank's outlook to positive. And Akbank TAS saw some retail interest.

"We saw some good demand on both the Garanti 2017s and 2021s yesterday and are left better sellers of both papers," a trader said.

GarantiBank's 2017s were seen trading at 102.35 bid, 102.85 offered while its 2021 notes were trading at 99.375 bid, 99.625 offered.

And Ukraine was very firm on talk of foreign interest in the steel sector.

"Ukraine is leading the charge on rumors of Brazil's Vale SA possibly buying Ferrexpo plc," the London-based market source said. "Given Vale's budgeted capital expenditures this year is $15 billion and the market capitalization of Ferrexpo is under $3 billion, it's clearly credible."

EM mandates pick up

Taking a closer look at recent trends in EM investing, RBC Capital Markets reported that the flow of new EM mandates awarded to asset managers has picked up in the last few weeks.

"These inflows could add additional support to the recent turnaround in flow-of-funds dynamics toward inflows back into EM among retail investors," RBC's report said. "However the level of conviction over near-term direction among large EM investors remains quite low, which may lead to quite volatile price action over coming weeks."

As the Federal Reserve's latest round of quantitative easing nears expiration in June, investors are taking on a more tactical mindset, the report said.

"A minority of investors also have begun to fret over a potential late-2011 sharp global growth slowdown partly driven by fiscal policy tightening across developed economies, though this is not yet a widespread worry," RBC said.

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