Qtel's deal active in trading; Union National Bank, FAGE print notes; EM spreads tighten

By Christine Van Dusen

Atlanta, Dec. 12 - Qatar Telecom QSC (Qtel), Abu Dhabi's Union National Bank PJSC and Greece's FAGE International SA and FAGE USA Dairy Industry Inc. sold notes on a Wednesday that saw investors largely unfazed by the news of a North Korean rocket launch.

But sentiment was tempered by concern about the United States' progress on fiscal cliff talks.

"North Korea launched a rocket earlier, but market shrugged it off," a London-based analyst said. "In terms of 24-hour sentiment on the fiscal cliff, there seems to be more pessimism overnight in whether a deal can be reached by Christmas."

Still, spreads tightened, with the Markit iTraxx SovX index spread narrowing by 3 basis points on Wednesday while the corporate index moved in 6 bps.

"The firm tone to stocks ... has given a feel-good factor to credit markets leading into year-end," the analyst said. "The large U.S. Treasury auctions this week and next are putting some pressure on U.S. Treasury yields, which is helping EM spread tightening this week."

In trading, the curves in the Middle East and North Africa continued to flatten while Dubai names traded well, a London-based market source said.

Most of the market's attention was focused on the new Qtel deal, in which the company, through subsidiary Qtel International Finance Ltd., priced a $1 billion issue of 3¼% notes due Feb. 21, 2023 at 98.721 to yield 3.399%, or Treasuries plus 175 bps.

The notes priced at the tight end of talk, set at Treasuries plus 175 bps to 180 bps.

Qtel notes see buying

Barclays, HSBC, Mitsubishi UFJ, Mizuho Securities, Morgan Stanley and QNB Capital were the bookrunners for Qtel's new Rule 144A and Regulation S transaction.

"This slots nicely between their existing 2021s and 2025s," a London-based trader said.

Some buying was seen throughout the day for Qtel's existing 2025s, which closed the European session tighter by 10 bps.

"The book size once again leads secondary tighter," a London-based trader said. "Very few Street offers."

FAGE does deal

In its new deal, Greek dairy FAGE priced a $250 million add-on to 9 7/8% senior notes due Feb. 1, 2020 at 101 to yield 9.618%, on top of revised price talk.

Citigroup Global Markets Inc. was the bookrunner for the Rule 144A and Regulation S deal.

The company plans to use the proceeds to refinance its 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.

UNB sells bonds

In another new deal, Abu Dhabi's Union National Bank printed a $250 million increase of its existing 3 7/8% notes due Nov. 10, 2016 at 104.499 to yield 2.65%, a market source said.

Citigroup, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered were the bookrunners for the Regulation S-only transaction.

The deal's existing size is $400 million.

Very few other issuers are likely to come to the market before the holiday slowdown, the analyst said.

"The main new issue supply window is shut now, so there's also window dressing going on in certain debt instruments or positioning ahead of next year's inflows," she said.

Morocco mixed

In trading, Morocco's new 4¼% 10-year notes that priced at 99.228 were seen Wednesday at 99.37 bid, 99.57 offered. On Tuesday the notes were quoted at 99.27 bid, 99.47 offered.

The sovereign's 5½% 30-year bonds that priced at 97.464 traded Wednesday at 97.87 bid, 98.62 offered after Tuesday's level 97½ bid, 98¼ offered.

Barclays, BNP Paribas, Natixis and Citigroup were bookrunners for the Rule 144A and Regulation S deal.

Elsewhere in Africa, demand was noted for bonds from Zambia and Nigeria, a trader said.

"Small sellers of Afreximbank," he said. "Egypt still heavy."

And some "nibbling" was seen for Angola's bonds, he said.

TAQA notes in focus

In other trading, Abu Dhabi National Energy Co.'s (TAQA) recent two-tranche issue of $2 billion notes due Jan. 12, 2018 and 2023 was in focus on Wednesday.

The Rule 144A and Regulation S deal included $750 million 2½% notes due 2018 that priced at 99.483 to yield Treasuries plus 200 bps. Those notes were seen Wednesday at 100½ bid, 100.62 offered after Tuesday's 100.47 bid, 100.67 offered.

The second tranche of $1.25 billion 3 5/8% notes due 2023 priced at 99.404 to yield 210 bps over Treasuries. Those notes traded Wednesday at 100.87 bid, 101.12 offered. On Tuesday they were seen at 100.80 bid, 101 offered.

BNP Paribas, Citigroup, HSBC and Standard Chartered were the bookrunners for the deal.

"There are still pockets of value out there," a London-based trader said. "Flow-wise, it was fairly active along the usual TAQA and International Petroleum Investment Co. (IPIC) curves."

Dubai, Jafza tighten

Month over month, Dubai's 2022s are 60 bps tighter while Jafza Holdings' notes have moved in by 70 bps, a trader said.

"Impressive squeeze," he said.

And Abu Dhabi Islamic Bank's perpetual notes - which recently priced at par to yield 6 3/8% - were trading Wednesday between 105 1/8 and 105 3/8 after Wednesday's level of 105 to 1051/4.

Demand was seen for Dar al Arkan's 2015s, which were 30 bps to 35 bps tighter on the week.

"Once again in pole position for the 'bond of the week' award," he said.

PDVSA gains as Chavez recuperates

Bonds from Venezuela and Petroleos de Venezuela SA (PDVSA) were "gyrating around" on Wednesday, a trader said, as it was reported that President Hugo Chavez's cancer surgery in Cuba was successful.

PDVSA's 8½% notes due 2017 ended up nearly half a point at 991/4, as did the 5 3/8% notes due 2027, which closed at 721/4.

However, the 9¾% notes due 2035 were a touch softer at 99.

Chavez shocked Venezuelans over the weekend when he announced that his cancer had returned and that he was headed to Cuba for another surgery. The resurgence of the cancer has citizens and investors wondering what will happen if Chavez dies during his term.

Venezuela bonds react

Venezuela's 2027 notes were seen trading at 102¾ after a low of 101 in the mid-morning on Wednesday, a New York-based trader said.

In other trading from Latin America, bonds from Argentina were mostly unchanged on Wednesday while bonds from Mexico moved down.

"Volumes were similar to yesterday," he said. "Accounts were better buyers."

Samruk-Energy sets talk

In deal-related news, Kazakhstan's JSC Samruk-Energy set initial price talk for its issue of up to $680 million of five-year notes at the 3¾% area, a market source said.

RBS Securities Inc. and Sberbank are the bookrunners for the Regulation S-only deal.

The proceeds will be used to fund the company's capital expenditure program.

Samruk-Energy is owned by the state through utility, rail and postal conglomerate JSC Samruk-Kazyna.

Zoomlion deal ahead

Also on Wednesday, China-based heavy machinery manufacturer Zoomlion Heavy Industry Science and Technology Co. Ltd. was planning an issue of senior notes with bookrunner Goldman Sachs, according to a company filing.

Proceeds from the Rule 144A and Regulation S deal will be used to fund the group's overseas expansion plan, including enhancing the distribution and service network and establishing research and development centers and manufacturing facilities.

The notes will be issued by special purpose vehicle Zoomlion HK.

Akbank, ADB plan issuance

New issues lie ahead for two banks, a trader said.

Turkey-based lender Akbank TAS is planning an issue of up to $1 billion of eurobonds by the end of 2013.

And Tunisia's African Development Bank is planning to issue $1 billion of bonds during the early part of 2013.

No other details were immediately available on Wednesday.

Stephanie N. Rotondo and Paul A. Harris contributed to this article.

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