Al Hilal Bank, Qatar National Bank plan notes; risk appetite wanes slightly; volumes thin

By Christine Van Dusen

Atlanta, Aug. 30 - Abu Dhabi's Al Hilal Bank and Qatar National Bank were among the few issuers to make moves toward the primary market on a Tuesday that saw volumes fall and risk aversion tick up on weaker-than-expected consumer confidence data from the United States.

"It was a lackluster session as holidays across a large part of the world saw volumes well below average," a London-based trader said. "We're not expecting a great deal from the market this week as the United States has a long weekend coming up, although we do have month-end tomorrow."

Still, some emerging markets assets managed to post gains, according to a report from RBC Capital Markets.

"Flows, however, have been impacted by local holidays in Singapore, Indonesia, Malaysia and the Philippines," the report said.

The JPMorgan Emerging Markets Bond Index Plus spread closed Monday 10 basis points tighter at Treasuries plus 331 bps, with Venezuela tighter by 26 bps and Argentina by 21 bps. On Tuesday, the EMBI Plus closed nearly flat, with Venezuela remaining an outperformer.

"Activity was muted and still very thin and technical, depending on the credit and bond. The market overall was still a little soggy," the London trader said. "Still there were pockets of outperformance where the Street was short. Otherwise, there was a little paper around."

Among the names that were somewhat active on Tuesday was Qatar's Qtel International. The company's 3 3/8% 2016 notes were quoted at 100.62 bid, 101.12 offered.

"Some extension trades were going on out of the 2014s and 2016s into 2025s," he said. "International Petroleum Investment Co.'s 2020s and 2021s were heavy, and the 2015s and 2016s are holding OK."

Dubai names see buyers

In other trading, names from Dubai were a bit heavy with offers improving throughout the morning. Though the sovereign's 2021s traded down, Dubai Water and Electricity Authority's 2020s were lifted at 103 and saw a wall of sellers, he said.

"It feels like there are buyers of Emaar Properties and Emirates around," he said.

Tuesday also saw Egypt's five-year credit default swap spreads register at about 30 bps off the wides.

"Some higher-beta names seem to be trying to find a clearing level with more balanced retail and small size flow," he said. "It will be interesting to see how this market trades this week."

Morocco in focus

Morocco's 5 3/8% notes due 2017 were seen at 101.62 bid, 102.37 offered while the sovereign's 4½% 2020 notes were trading at 90.62 bid, 91.12 offered.

"The 2017s are holding a little better than the 2020s over the month," a trader said. "They're both slightly tighter over the week."

Some buying was seen for the 2017s and selling for the 2020s, he said.

Afrexim trades down

Elsewhere in Africa, some buyers were seen, but overall the session was less than stellar, he said.

Cairo-based African Export-Import Bank (Afreximbank)'s 2016 notes - which priced in July at par to yield 5¾% - opened at 99.18 bid, 99.81 offered on Tuesday.

Commerzbank, HSBC, Mitsubishi UFJ Securities and Standard Bank were the bookrunners for the Regulation S notes.

Turkey gets some attention

Looking to Turkey, some trades of decent size went through for the sovereign, a trader said.

"It's not as quiet as I thought it would be in the absence of the locals," he said. "Also, internationals are better supporters of the banks with interest mainly on Akbank papers and some Garanti Bankasi AS 2021s."

After buyers were seen for Yuksel Insaat's 2015s on Friday, the theme continued on Tuesday.

"We're trading Yuksel 2015s again in smalls in the context of 89 to 91 and left a better seller," the trader said.

Middle Eastern banks on tap

In deal-related news, Abu Dhabi's Al Hilal Bank is planning an issue of $500 million notes due 2016, a market source said.

The notes would be the first tranche of a sukuk sale totaling as much as $5 billion.

Proceeds are expected to be used to diversify funding and support growth for the bank.

And lender Qatar National Bank plans to issue up to $7.5 billion of notes with bookrunners Barclays Capital, HSBC and QNB Capital, a market source said.

The proceeds are expected to be used to fund the company's operations.

"The market is pretty slow lately," a New York-based trader said. "Yesterday we even closed at 3 p.m. It's a huge vacation week this week."

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