EM finishes hectic week on quieter note; Scotiabank Peru, Romania tap bookrunners

By Christine Van Dusen

Atlanta, Nov. 30 - Emerging markets assets finished a hectic week on a calmer note, with investors primarily interested in the recent notes from Abu Dhabi's International Petroleum Investment Co. (IPIC), bonds from Dubai names and notes from Brazil's Petroleo Brasileiro SA (Petrobras) and Vale SA.

Following the frenzy of new issues on Wednesday and Thursday, the primary market was slower on Friday, with deals being prepped by issuers like Scotiabank Peru SAA and Romania.

"Quiet, but it's Friday," a London-based trader said. "All told a very active week. The peak of the action was Wednesday. "National Day holiday next week might reduce liquidity."

The long end of the curves for Petrobras and Vale saw buyers on Friday as investors' former hunt for yield shifted to an effort to extend duration on quality credits, a New York-based trader said.

"High-betas continue to be thinly traded but are following the high-grade names higher, but underperforming them," he said.

Pockets of value were sighted for bonds from Dubai names, the London trader said, and other issuers from the region were inspired by the recent $2.9 billion three-tranche issue of notes from IPIC.

"As the IPIC deals showed, new issues reinvigorate curves and interest in a name," he said. "TAQA's 2017s versus IPIC's 2017s is 30 basis points; that has not been here for a long time."

Demand was noted for Saudi Electricity Co., Dubai's DPWorld and RasGas Ltd.

"Some paper is around on certain bank names," he said. "The bond of the week? Jafza Holdings' 2019 for me. Closes out 114 bid. Impressive effort."

From Africa, Nigeria was a standout, with its 2021 bond trading at 117¼ bid, 117¾ offered.

Scotiabank Peru picks leads

For its upcoming deal, Lima-based Scotiabank Peru mandated Bank of America Merrill Lynch, Goldman Sachs and Scotiabank as bookrunners for a dollar-denominated issue of notes, a market source said.

A roadshow for the Rule 144A and Regulation S transaction will begin Dec. 3 in London and Lima, then travel to Switzerland, Bogota and Santiago before wrapping up on Dec. 6 in Boston and Los Angeles.

Scotiabank Peru is a Lima, Peru-based 97.75%-owned subsidiary of Bank of Nova Scotia.

And Romania mandated Barclays, Citigroup and HSBC for a dollar-denominated issue of benchmark-sized notes, a market source said.

No other details were immediately available on Friday.

Cencosud prices notes

These headlines followed the Thursday pricing of Chile-based retail company Cencosud SA's $1.2 billion issue of 4 7/8% notes due in January 2023 at 99.062 to yield Treasuries plus 337.5 bps.

JPMorgan, BBVA, BNP Paribas, Itau BBA, Mitsubishi UFJ, Mizuho and Santander were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used to repay outstanding indebtedness.

Prior to pricing, the notes struggled in the gray market, a New York-based trader said.

CFR sells bonds

Also on Thursday, Chile's CFR Pharmaceuticals SA sold $300 million 5 1/8% notes due Dec. 6, 2022 at par to yield 5 1/8%, a market source said.

Deutsche Bank and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used to fund acquisitions and for general corporate purposes.

And Chinese transportation infrastructure company Shandong Hi-Speed Group printed RMB 1 billion 5.8% notes due Dec. 7, 2015 at 99.73 to yield 5.9%, a market source said.

Bank of Communications, China Citic and Citic Securities were the bookrunners for the Regulation S deal.

Yapi Kredi, KUO print notes

In another new deal from Thursday, Turkey-based lender Yapi ve Kredi Bankasi AS sold $1 billion 5½% notes due Dec. 6, 2022 at par to yield 5½%, or Treasuries plus 388.5 bps.

Bank of America Merrill Lynch, Mitsubishi UFJ Securities, Morgan Stanley and Unicredit were the bookrunners for the Rule 144A and Regulation S deal.

And Mexico-based conglomerate Grupo KUO SAB de CV sold $325 million 6¼% notes due Dec. 15, 2022 at par to yield 6¼%, a market source said.

The notes were talked at a yield in the 6½% area.

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

Rosneft deal oversubscribed

The final book for Russia-based oil company OAO Rosneft's recent $3 billion two-tranche issue of notes due 2017 and 2022 was about $25 billion with 40% toward the five-year tranche and 60% to the notes due in 2022, a market source said.

The Rule 144A and Regulation S deal included $1 billion 3.149% notes due 2017 that priced at par to yield Treasuries plus 252.9 bps.

The second tranche, $2 billion 4.199% notes due 2022, priced at par to yield Treasuries plus 258.2 bps.

Deutsche Bank, Gazprombank, Bank of America Merrill Lynch and Morgan Stanley were the bookrunners for the transaction.

Mongolia notes attract orders

The recent $1.5 billion two-tranche issue of notes due in 2018 and 2022 from the Government of Mongolia drew more than $15 billion, a market source said.

The Rule 144A and Regulation S 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%.

That tranche drew $6 billion in orders from 310 accounts, with 40% from the United States, 32% from Europe and 28% from Asia.

Funds accounted for 82%, private banks 7%, banks 5%, pensions 2% and insurers 2%.

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

That part of the deal drew in more than $9 billion in orders from 370 accounts, with 45% from the US, 29% from Asia and 26% from Europe.

Funds picked up 85%, private banks 4%, banks 4%, insurers 2%, pensions 2% and others 3%.

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.

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