Bank of Georgia sells notes as investors shun most risk; Bahrain, Majid Al Futtaim active

By Christine Van Dusen

Atlanta, June 28 - JSC Bank of Georgia was among the few issuers to price notes on Thursday as investors shied away from most risk and focused on Europe and the start of a two-day economic summit there.

The bank priced $250 million 7¾% senior unsecured notes due 2017 at 99.491 to yield 7 7/8% via JPMorgan, Credit Suisse and Bank of America Merrill Lynch in a Rule 144A and Regulation S deal.

Also impacting Thursday's mood was the report that weekly jobless claims rose in the United States.

In response, the JPMorgan Emerging Markets Bond Index Global spread widened by 4 basis points to Treasuries plus 390 bps on Thursday.

Still, some emerging markets names were active in the secondary market, including the new issues from the Kingdom of Bahrain and Dubai's Majid Al Futtaim Holding LLC.

The $1.5 billion 6 1/8% notes due 2022 from Bahrain that priced at 99.867 to yield mid-swaps plus 437.5 bps opened Thursday at 100.125 bid, 100.25 offered.

Citigroup, Gulf International Bank, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

"There's very good two-way flow on the Bahrain 2022s here at the open," a trader said.

Later in the morning, the notes were quoted at 99.97 bid, 100.07 offered.

"It's doing well, but there are few U.S. sellers now," he said.

By the European afternoon, the notes were trading at 100.20 bid, 100.30 offered.

Overall it was a very active day for the notes, a London-based trader said.

"As the day went on, more Asian and weaker hands let go of the bonds, but it never got below 100," he said. "It traded there, yes, but not below."

The notes proceeded to steadily tick higher as locals beefed up their allocations.

"The weaker hands had already sold their bonds," he said. "The bonds went up as high as 100.25, and then faded as stocks head south."

The notes closed Thursday at par bid, 100.20 offered.

Al Futtaim gets attention

Another new issue was active in trading on Thursday. The new $500 million issue of 5¼% notes due 2019 from Majid Al Futtaim, which priced Wednesday at par to yield mid-swaps plus 389.7 bps, opened at 100.60 bid, 100.85 offered.

JPMorgan, National Bank of Abu Dhabi, Barclays Capital, Standard Chartered and UBS were the bookrunners for the Regulation S transaction.

The notes closed the previous day at 100.375 bid, 100.50 offered.

As the European session went on, the notes traded lower, at 100.50 bid, 100.70 offered and then 100.30 bid, 100.60 offered.

By Thursday's close, the notes were at 100.50 bid, 100.62 offered, a trader said.

"Some regional players are topping up what they told me were fairly poor allocations," he said. "Bottom line, the name is well known, investment grade, and the success of their sukuk earlier this year gives people comfort. And it's something different from the usual quasi-sovereign and bank paper."

"There's very good two-way flow on both [Majid Al Futtaim] and Bahrain," another trader said. "In a nutshell we're settling at 100.50 bid, 100.70 offered on [Majid Al Futtaim] with Street prints at 100.625 a few times. Bahrain is holding 100 very so far in the Street. I've traded very good size between 100.05 and 100.15 after an initial 100.25 print locally this morning. It's very fast and active."

In other trading on Thursday, Saudi Electricity Co.'s 2017 notes opened at 100.62 bid, 101.12 offered and closed at 100.87 bid, 101.37 offered. The notes were seen Wednesday at 100.75 bid, 101.25 offered.

The company's 2022 notes started the day at 104.25 bid, 105 offered and later traded at 104.25 bid, 105 offered. On Wednesday, the notes were quoted at 104 bid, 104.75 offered.

TAQA notes unchanged

Abu Dhabi National Energy Co. (TAQA) saw its 2012 notes trading at 101.10 bid, 101.50 offered, unchanged from Wednesday.

The company's 2036 notes - seen Wednesday at 111.62 bid, 112.62 offered - traded Thursday at 111.75 bid, 112.75 offered before closing back at 111.62 bid, 112.62 offered.

Meanwhile, little to no selling was reported for International Petroleum Investment Co.'s notes.

"The 2026 notes now trade with a 113 handle and the 2041s went down at 116.625," a trader said. "The 2022s are just going up at a fresh high of 108.625 and we were lifted in the 2020s as well. Impressive."

Dubai issuers in focus

The recent $650 million 7% notes from Dubai's Jebel Ali Free Zone (Jafza) - which priced at par to yield Treasuries plus 588.9 bps - opened on Thursday at 104.75 bid, 105.25 offered after trading Wednesday at 105.125 bid, 105.625 offered.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD, National Bank of Abu Dhabi and Standard Chartered were the bookrunners for the Regulation S deal.

Dubai Water and Electricity Authority's 2015 notes traded Thursday at 110.75 bid, 111.25 offered after Wednesday's levels of 111 bid, 111.50 offered. The company's 2020 bonds - seen at 109 bid, 109.75 offered on Wednesday - were quoted Thursday at 109 bid, 109.37 offered.

Dubai's 2020 bonds were seen Thursday at 112 bid, 112.75 offered after trading Wednesday at 112 bid, 112.75 offered.

Also, South Africa's bonds were "very resilient," a trader said.

Russian issuers eye deals

In other deal-related news, Moscow-based Russian Agricultural Bank is planning a $250 million-minimum tap of its existing notes due 2017, a market source said.

The original issue of $500 million priced at a yield of 5.3%, or mid-swaps plus 425 bps via Citigroup, JPMorgan and VTB Capital.

Market sources were also whispering about a possible RUB 40 billion issue of notes from Russia's Magnitogorsk Iron and Steel Works.

Aleesia Forni contributed to this report.

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