Zambia deal deemed a major success; IDBI Bank, Sun Hung Kai, Korea Finance sell bonds

By Christine Van Dusen

Atlanta, Sept 17 - Zambia's recent issue of notes was a market darling on a Monday that saw new deals from India's IDBI Bank, Hong Kong-based Sun Hung Kai Properties and Korea Finance Corp., even as negative economic data kept investors cautious.

"Interesting day, all told, with generally a weaker bias and some chips being taken off the table," a London-based trader said. "The market closes out, for the most part, a little weaker."

The weakness was spurred by the report that manufacturing in New York has dropped this month.

Still, many recent deals were in high demand on Monday. Investors were particularly interested in Zambia's new $750 million 5 3/8% notes due 2022, which came to the market last week at 98.108 to yield 5 5/8%, or Treasuries plus 383.6 basis points.

The Rule 144A and Regulation S deal - with bookrunners Barclays Capital and Deutsche Bank - attracted $12 billion in orders from 425 investors.

About 56% came from the United States, 40% from Europe, 3% from Asia and 1% from others. Fund managers accounted for 85%, private banks and banks 8%, pension and insurance companies 5% and others 2%.

In trading, the 2022 notes from Zambia opened Monday at 101.75 bid, 102.25 offered and were later seen at 101.625 bid, 102.125 offered after Friday's level of 101.50 bid, 101.90 offered.

In deal-related news, Turkey set initial price talk at mid-swaps plus 200 bps to 210 bps for its planned dollar-denominated issue of 51/2-year notes. The Rule 144A and Regulation S deal, via Citigroup, HSBC and Liquidity House of Kuwait, is expected to price as soon as Tuesday.

Latin American issues ahead

Mexican utility Comision Federal de Electricidad (CFE) is joining the pipeline of upcoming new issues. The state-owned utility is expected to issue Ps. 12 billion notes due in 30 years, a market source said.

Colombian telecommunications company Colombia Telecomunicaciones SA set the size at $750 million and the tenor at 10 years for its planned new issue, a market source said.

The deal is being marketed on a roadshow with Credit Suisse, JPMorgan and HSBC this week.

IDBI prices notes

In its new deal, IDBI Bank priced a $500 million issue of 4 3/8% notes due March 26, 2018 at 99.855 to yield Treasuries plus 370 bps, a market source said.

The notes priced tighter than talk, set at the Treasuries plus 375 bps area.

ANZ, BNP Paribas, Citigroup, HSBC, RBS and Standard Chartered were the bookrunners for the Regulation S-only deal.

Asian issuers print bonds

Also on Monday, financial and securities holding company Sun Hung Kai Properties sold $350 million 6 3/8% notes due Sept. 24, 2017 at 99.684 to yield 6.45%, a market source said.

Standard Chartered and UBS were the bookrunners for the Regulation S-only notes.

Seoul-based Korea Finance priced a $300 million add-on to its 2¼% notes due Aug. 7, 2017 at 101.432 to yield Treasuries plus 123 bps.

Citigroup, Credit Suisse and UBS were the bookrunners for the Securities and Exchange Commission-registered deal.

The original issue totaled $500 million and was issued on Aug. 7.

Proceeds will be used for general operations, including extending foreign currency loans.

Angola, Access trade up

In the secondary market on Monday, the Republic of Angola's 7% notes due 2019 that priced at par were seen at 108.50 bid, 109.25 offered.

VTB Capital was the bookrunner for the Regulation S deal.

And the recent 7¼% notes due 2017 that Nigeria's Access Bank plc priced at par closed Monday at 104.25 bid, 105 offered.

Citigroup and Goldman Sachs were the bookrunners for the Rule 144A and Regulation S deal.

"There are sellers around on Egypt's 2020s and usual buyers on Nigeria, Gabon and Senegal," a trader said. "Decent two-way interest on Access Bank's 2017s today. Given how tough GTB Finance is to source these days, this one continues its great run."

Middle East in focus

From the Middle East, Qatar-based Qtel International saw its 2025 notes trade fairly actively after the notes were "nigh on impossible to find" last week, a trader said.

Qatar saw its 2042 bonds widen 8 bps to 125 offered on Monday.

Dubai Water and Electricity Authority's 2020 bonds moved lower, closing at 117.50 bid, 118.25 offered after Friday's level of 118.75.

"They have had a good squeeze and move higher, so I wonder just how many shorts there are to fill in if we move lower," a trader said. "In Dubai, it did also feel like there was some paper around with Emaar Properties, Majid al Futtaim, Jebel Ali Free Zone and parts of the sovereign curve being marked lower and hit in some cases."

Investors buy on dips

Lebanon, meanwhile, saw some offers in the Street on the 2020 and 2026 bonds after last week's solid performance, the trader said.

Bahrain's 2022 bonds held well on Monday with little selling pressure, another trader said. The notes closed at 106.50 bid, 107 offered.

International Petroleum Investment Co.'s 2041 bonds were 15 bps tighter on the week.

"Ultimately the year has proven to be a buy-on-dip story, but there's definitely some paper around today," the trader said.

Ukraine bonds improve

In other trading, eurobonds from Ukraine continued to tick steadily upward, according to Svetlana Rusakova of Dragon Capital.

The sovereign's 2020 and 2016 notes are seeing yield ranges close to those seen in the first half of 2011, she said.

Corporates such as Naftogaz and Oschadbank were squeezed higher after moving up two points on Friday.

"No meaningful supply around," she said.

CapitaLand deal oversubscribed

The final book for Singapore-based property developer CapitaLand Ltd.'s $400 million 4.076% notes due Sept. 20, 2022 - which on Friday priced at par to yield Treasuries plus 225 bps - was $7 billion, a market source said.

About 44% of the orders came from Singapore, 39% from Hong Kong, 13% from Europe, 3% from Malaysia and 1% from Taiwan and Korea.

DBS, HSBC, JPMorgan and Morgan Stanley were the bookrunners for the Regulation S deal.

Kaisa bonds attract orders

Chinese property company Kaisa Group Holdings attracted about $3.9 billion in orders from 198 accounts for its recent $250 million issue of five-year notes, a market source said.

The notes priced at par to yield 12 7/8% with bookrunners Citigroup, Deutsche Bank and HSBC in a Regulation S-registered transaction.

About 90% of the orders came from Asia and 10% from Europe. Asset and fund managers accounted for 75%, private banks 19%, banks 5% and insurers 1%.

Tinkoff notes in demand

Also oversubscribed was Friday's deal from Russian credit card lending institution Tinkoff Credit Systems.

The company priced a $250 million issue of 10¾% notes due Sept. 18, 2015 at par to yield 10¾% via Alfa Bank, Citigroup and JPMorgan in a Regulation S-only transaction.

The final book was $290 million from 80 accounts. About 50% of the orders came from Europe, 23% from the United Kingdom, 21% from Switzerland, 4% from offshore and 2% from others.

Banks and private banks accounted for 59%, asset managers and funds 30% and hedge funds 11%.

Investors like Colombia deal

Another new deal attracted a significant order book, a market source said.

The Republic of Colombia's COP 1 trillion 4 3/8% global TES bonds due 2023 drew COP 2 trillion with 70 investors, a market source said.

The notes, payable in dollars, priced at 98.995 to yield 4½% with bookrunners Bank of America Merrill Lynch and Morgan Stanley in a Securities and Exchange Commission-registered deal.

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