Shui On, Vakifbank, Bradesco, Clarin do deals; EM investor sentiment rises, then ebbs

By Christine Van Dusen

Atlanta, Dec. 3 - China's Shui On Land Ltd., Turkey's Turkiye Vakiflar Bankasi TAO (Vakifbank), Brazil's Banco Bradesco SA and Argentina's Grupo Clarin SA sold notes on Monday as emerging markets assets got an early - but short-lived - boost from Greece's plan to buy back bonds.

Investor sentiment was lifted by the debt-saddled sovereign's plan to buy back up to €10 billion of bonds issued earlier this year. Also improving the picture on Monday was the news that the German Chancellor supports debt forgiveness for Greece after 2014.

But the good mood petered out a bit as the day went on, given the state of the fiscal cliff negotiations in the United States, and spreads and prices for emerging markets bonds were little changed.

"Negotiations are likely to be protracted," according to a report from Barclays. "While some say the economic effect of going 'over the cliff' is exaggerated, we believe the cliff is indeed a cliff."

The Markit iTraxx SovX index spread started Monday unchanged while the corporate index spread was tighter by 2 basis points.

In deal-related news, Greek dairy company FAGE International SA and FAGE USA Dairy Industry Inc. were on the road, marketing an add-on to their 2020 notes. And Bahrain Telecommunications Co. (Batelco) was planning an issue of dollar notes.

In trading, the hot $2.9 billion three-tranche issue of notes due in 2015, 2018 and 2023 from Abu Dhabi's International Petroleum Investment Co. (IPIC) was somewhat lukewarm on Monday.

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, which traded Thursday at 100.12 bid, 100.37 offered, were unchanged early Monday.

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

IPIC notes in focus

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 opened Monday at 101 bid, 101½ offered after trading Thursday at 101.28 bid, 101.58 offered.

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 traded Monday at 101 bid, 101¼ offered after Thursday's levels of 101¼ bid, 101½ offered.

Turkey's long paper performs

In trading from Turkey, long-dated paper has been hovering near highs while some profit-taking has been seen for corporate names, the London-based analyst said.

"This morning the Turkey sovereign is opening slightly tighter, in line with the overall tone," she said.

The $1 billion issue of 5½% notes due Dec. 6, 2022 that Turkey-based lender Yapi ve Kredi Bankasi AS recently priced at par was trading Monday at 101.45, a trader said.

The notes priced at a spread of Treasuries plus 388.5 bps via Bank of America Merrill Lynch, Mitsubishi UFJ Securities, Morgan Stanley and Unicredit in a Rule 144A and Regulation S deal.

Russian notes in demand

From Russia, Gazprom and VTB Bank continued to see demand for their perpetual notes, the London analyst said.

"Better buying in Sberbank 2022 senior notes - the subordinated and senior spread there moved back out to 46 bps from 37 bps briefly last week - while the sovereign saw some paper coming out," she said.

Rosneft bonds trade up

Two-way activity was noted for the recent issue of notes from Russian oil company OAO Rosneft, which priced a $3 billion two-tranche issue of notes due in 2017 and 2022 in a Rule 144A and Regulation S transaction.

The deal included $1 billion 3.149% notes due 2017 that priced at par to yield Treasuries plus 252.9 bps. The second tranche of $2 billion 4.199% notes due 2022 priced at par to yield Treasuries plus 258.2 bps.

"Rosneft's 2022s are going through at 101.40," the London analyst said on Monday morning.

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

IMF visit boosts Ukraine

From Ukraine, sovereign bonds have been experiencing demand since the International Monetary Fund set its visit for Dec. 7 to Dec. 17.

"Thus the scenario under which the government could start negotiations in December, sign a new lending program and secure the first loan tranche in first-quarter 2013 now seems realistic," said Svitlana Rusakova of Dragon Capital.

Shui On, Vakifbank sell notes

In its new deal, China-based property developer Shui On Land priced a $500 million issue of 10 1/8% perpetual notes at par to yield 10 1/8%, a market source said.

Deutsche Bank, JPMorgan, Standard Chartered and UBS were the bookrunners for the Regulation S deal.

And Turkey's Vakifbank printed a $400 million increase of its existing 6% notes due Nov. 1, 2022 at 103.766 to yield Treasuries plus 386.8 bps.

Barclays, Goldman Sachs, ING, Standard Chartered and National Bank of Abu Dhabi were the bookrunners for the Rule 144A and Regulation S deal.

The original $500 million issue priced in October at par to yield 6%, or Treasuries plus 422.2 bps.

Bradesco, Clarin price bonds

Also on Monday, Brazil's Banco Bradesco sold RMB 300 million 3.9% notes due Dec. 6, 2014 at par to yield 3.9%, a market source said.

BNP Paribas was the bookrunner for the Regulation S deal.

And Argentina-based media conglomerate Grupo Clarin priced a $50 million issue of 9 3/8% bonds due Jan. 31, 2018 that were sold to the company's Cablevision SA Paraguayan subsidiaries, according to a company announcement.

No other details were immediately available on Monday.

FAGE on roadshow

FAGE International and FAGE USA are on a roadshow in Frankfurt and London for a $250 million add-on to their 9 7/8% senior notes due 2020, a market source said.

The Rule 144A and Regulation S offering will also be marketed in New York, New Jersey, Boston and on the West Coast before pricing by the end of the week of Dec. 10.

Citigroup Global Markets is the bookrunner for the deal, the proceeds of which will be used to refinance FAGE's existing senior notes due 2015, to refinance other debt facilities, to fund capital expenditures and for general corporate purposes.

The original $150 million issue priced at 93.278 to yield 11% in January 2010.

Batelco plans bonds

Bahrain's Batelco is planning a dollar-denominated issue of notes, a market source said.

BNP Paribas and Citigroup are the bookrunners for the deal.

No other details were immediately available on Monday.

China Longyuan prints notes

On Friday, China Longyuan Power Group Ltd., through subsidiary Hero Asia Investment Ltd., priced a $400 million issue of 5¼% perpetual notes at par to yield 5¼%, according to a company filing.

Goldman Sachs, Morgan Stanley and UBS were the bookrunners for the Regulation S deal.

The proceeds will be used to develop and expand the company's new energy businesses and for working capital needs.

China Longyuan Power is a Beijing-based wind power producer.

Bond fund inflows decline

In other news, inflows into emerging markets bond funds declined to $804 million for the week ended Nov. 28, according to a report from data tracker EPFR Global.

"For the first time in five weeks, hard currency emerging markets bond funds outgained their local currency counterparts," the report said, noting that investors were responding to a surge of new issues.

Some sovereigns attracted significant inflows, according to a separate report from RBC Capital Markets.

"Turkey's data stood out, owing to sizeable non-residents' purchases of both local fixed income and equities, triggering a rally," the report said. "Meanwhile, many other EMs continued to post improved, though modest, portfolio capital inflows."

Paul A. Harris contributed to this article.

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