Mongolia, America Movil do deals; Greece, U.S. concerns can't slow 'slew' of EM activity

By Christine Van Dusen

Atlanta, Nov. 28 - The Government of Mongolia and Mexico's America Movil SAB de CV sold notes on Wednesday amid a flurry of activity for emerging markets assets, with much of the trading focused on the recent $2.9 billion three-tranche issue from Abu Dhabi's International Petroleum Investment Co. (IPIC).

"Busiest day for a long time. Obviously IPIC was at the forefront of proceedings," a London-based trader said. "A very busy day with solid two-way flow centered around their successful return to the markets."

This heavy activity took place even as the broader markets were somewhat soft amid continued concerns about the United States' fiscal-cliff negotiations and the bailout package for Greece.

"Financial markets traded softly, despite benign economic data in the US and the announcement of a long-anticipated financing package for Greece," according to a report from Barclays.

Some market-watchers were skeptical and expressed concern that the plan for Greece only takes care of near-term issues and doesn't adequately address medium-term financing and debt sustainability.

Also tamping down on enthusiasm was the news that minimal progress had been made on the fiscal cliff talks, Barclays said.

The Markit iTraxx SovX index spread opened about 2 basis points wider, while the corporate index was wider by about 3 bps.

"In general we see a little profit-taking going on, as reflected in the widening credit default swaps markets," a London-based analyst said.

Meanwhile, numerous issuers made headway on upcoming deals. The list included Mexico's Grupo Kuo SAB de CV, Israel-focused Altice Group, Russia's Tinkoff Credit Systems, China Longyuan Power Group Ltd., Bahrain's Gulf International Bank BSC and Russia's Federal Grid Co. of Unified Energy System.

Said the London trader, "there was a slew of other activity in the market."

Mongolia prices notes

In its new deal, Mongolia priced a $1.5 billion two-tranche issue of senior notes due in 2018 and 2022 in a Rule 144A and Regulation S transaction.

The deal included $500 million 4 1/8% notes due Jan. 5, 2018 that priced at 99.996 to yield 4 1/8%, at the tight end of talk, set at 4 1/8% to 4¼%.

The second tranche, $1 billion of 5 1/8% notes due Dec. 5, 2022, priced at par to yield 5 1/8%. Talk was set at 5 1/8% to 5¼%.

Bank of America Merrill Lynch, Deutsche Bank, HSBC, JPMorgan and TDB Capital were the bookrunners for the deal.

The proceeds will be used for infrastructure and utility projects, according to a report from Standard & Poor's.

America Movil sells bonds

In another new deal, Mexican telecommunications company America Movil priced a Ps. 15 billion issue of 6.45% notes due Dec. 5, 2022 at 99.989 to yield 6.45%, a market source said.

Deutsche Bank, HSBC and Morgan Stanley were the active bookrunners. BBVA, Citigroup and Credit Suisse were passive.

IPIC notes active

The new $2.9 billion three-tranche issue of notes due in 2015, 2018 and 2023 from Abu Dhabi's IPIC was active in trading on Wednesday.

The deal included $750 million 1¾% notes due Nov. 30, 2015 that priced at 99.762 to yield 1.832%, or mid-swaps plus 135 bps. The notes opened Wednesday at 100¼ bid, 100½ offered and stayed at that level for most of the morning.

In the afternoon, the notes were quoted at 100.27 bid, 100.42 offered before moving down to 100¼ bid, 100.35 offered.

BNP Paribas, JPMorgan, National Bank of Abu Dhabi, Natixis, RBS and Unicredit were the bookrunners for the Regulation S-only deal.

"The IPIC new deals are on fire," a London-based market source said.

New notes 'well placed'

The second tranche of new bonds from IPIC, €800 million of 2 3/8% notes due May 30, 2018, priced at 99.583 to yield 2.459%, or mid-swaps plus 145 bps. The notes started Wednesday at 100.40 bid, 100.90 offered.

As the morning went on, the notes were seen at 100.87 bid, 101¼ offered and later moved to 100.90 bid, 101¼ offered. Later the day the 2018s were quoted at 101¼ bid, 101.45 offered.

"These bonds felt well placed," a trader said. "There were eight buyers for every seller at 5 p.m. last night, so the past of least resistance for the yield-hungry market was obviously a decent mark higher as we came in this morning."

IPIC's 2023s trade up

IPIC's third tranche of new bonds, €850 million 3 5/8% notes due May 30, 2023, priced at 99.021 to yield 3.742%, or mid-swaps plus 195 bps. The notes began the session on Wednesday at 100.68 bid, 101.18 offered, then moved to 101.12 bid, 101.62 offered.

Later, the 2023 were sighted at 101½ bid, 101.85 offered before trading at 101.40 bid, 101.65 offered.

"A decent amount of the '23s went through at the 101.625 level," a trader said. "All three bonds seem to have reached a clearing level."

Middle East in focus

Also from the Middle East, some curve flattening was seen for bonds from Abu Dhabi National Energy Co. (TAQA) and Qatar, a London-based market source said.

"Abu Dhabi Islamic Bank's perpetuals are up at new highs, at 1051/4," she said.

At the European close, the notes were seen at 105.37 bid, 105.87 offered amid impressive demand, a trader said.

"I think the success of this transaction may lead others to follow," he said.

Sellers were noted for First Gulf Bank while two-way action was seen for bonds from Dubai.

Sellers emerge, curves flatten

Sellers were also seen for HSBC Middle East's sukuk, and two-way activity was noted for Dubai Electricity and Water Authority, a trader said.

"Two-way on Saudi Electricity Co. 2022s," he said.

In other trading on Wednesday, bonds from Turkey were slightly weaker, as were those along Russia's sovereign curve, a London-based analyst said.

"Russian corporates are mostly flat, with some selling in Sberbank paper," she said. "Away from the Middle East, assets have their own agenda, with lots of cash around and little float."

Grupo Kuo sets talk

In deal-related news, Mexican chemical, automotive and food conglomerate Grupo Kuo set price talk at the 6½% area for its planned dollar-denominated issue of 10-year notes, a market source said.

Credit Suisse, Citigroup and Bank of America Merrill Lynch are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to fund a tender offer for the company's outstanding 9¾% notes due 2017.

Pricing is expected to take place by the end of the week.

Grupo Kuo is a Mexico City-based chemical, automotive and food conglomerate.

Altice Group plans notes

Altice Group is planning a multi-tranche issue of euro- and dollar-denominated bonds due 2019 and 2020, a market source said.

A $700 million-equivalent tranche of dollar and euro bonds will mature in December 2019 and will be non-callable for three years.

The second tranche, $390 million of senior notes, will be due in December 2020.

Goldman Sachs, HSBC and Morgan Stanley are the bookrunners for the Rule 144A and Regulation S deal.

A roadshow is scheduled for Dec. 5 and Dec. 6.

Proceeds will be used to refinance the telecommunications company's debt and to finance the acquisition of the remaining 31% stake in Hot Mobile that Altice does not own.

Altice operates Hot Mobile, a wireless telecommunications company in Israel, and Israeli cable television company Hot.

Tinkoff gives guidance

Russia-based credit card lending institution Tinkoff Credit Systems set initial price guidance at the 14% area for its planned issue of dollar-denominated notes due in 5½ years, a market source said.

Goldman Sachs and JPMorgan are the bookrunners for the Regulation S-only deal.

And wind power producer China Longyuan Power Group has tapped Goldman Sachs, Morgan Stanley and UBS as bookrunners for a dollar-denominated issue of perpetual senior notes, a market source said.

The Regulation S deal is expected to come to the market after a roadshow in Hong Kong and Singapore.

Bahrain bank picks leads

Bahrain's Gulf International Bank has mandated Barclays, Gulf International Bank Capital, JPMorgan, National Bank of Abu Dhabi, Societe Generale and Standard Chartered Bank for a roadshow to market an issue of dollar notes, a market source said.

The marketing trip began on Wednesday and will travel through the Middle East, Asia and Europe.

A benchmark-sized, Regulation S deal is expected to follow.

And Russia's Federal Grid mandated Barclays, VTB Capital, Sberbank, Gazprombank and Morgan Stanley as bookrunners for a ruble-denominated issue of bonds.

A roadshow will begin Thursday for the Regulation S-only deal.

China Development popular

The final book for China Development Bank's two-tranche issue of $1.5 billion notes due 2017 and 2022 was $16.5 billion, a market source said.

The Regulation S deal included $500 million 2% notes due 2017 that priced at 99.537 to yield Treasuries plus 145 bps. That tranche attracted $7 billion in orders from 290 investors, with 72% from Asia, 13% from Europe and 15% from the offshore United States.

Funds picked up 62%, banks 19%, public sector and insurance 14% and private banks 5%.

Second tranche sees demand

The second tranche of the China Development Bank deal, consisting of $1 billion 3¼% notes due 2022, came to the market at 99.223 to yield Treasuries plus 170 bps. The final book was $9.5 billion from 330 investors, with 60% from Asia, 25% from Europe and 15% from offshore United States.

Funds took up 72% of the orders, banks 13%, public sector and insurance 10% and private banks 5%.

CDB Corp., Goldman Sachs, HSBC, Standard Chartered, Bank of America Merrill Lynch, CCBI, Citigroup, Deutsche Bank, Morgan Stanley and RBS were the bookrunners for the deal.

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