Russian corporates VimpelCom, PhosAgro, Sberbank price deals; volumes improve for Lat Am

By Christine Van Dusen

Atlanta, Feb. 6 - Corporate issuers from Russia dominated the primary market on Wednesday, with OJSC VimpelCom, OJSC PhosAgro and Sberbank pricing new notes amid tighter spreads and a positive tone for emerging markets assets.

The Markit iTraxx SovX index spread started Wednesday's session about 1 basis point tighter. The corporate index narrowed by 6 bps.

"Markets are opening positively this morning," a London-based analyst said. "[Emerging markets] are performing generally well on the back of a strong Asian session."

Notes from Ukraine were trading about 9 bps tighter, and the new issue - a $1 billion tap of its 7.8% notes due 2022 that priced at 101.175 to yield 7 5/8 - was being well absorbed, the analyst said.

JPMorgan and VTB Capital were the bookrunners for the Rule 144A and Regulation S deal.

Demand has also been seen for the sovereign's 2017s, said Svitlana Rusakova of Dragon Capital.

"Corporate and banking names stood firm," she said.

Bonds from Latin America saw increased volumes and some slight widening on higher-rated names on Wednesday, a New York-based trader said. Argentina was an underperformer while Venezuela's bonds moved up in trading.

From the Middle East, the recent issue of $1 billion 6 3/8% perpetual Islamic bonds that Abu Dhabi Islamic Bank priced a at par opened Wednesday at 102 7/8 bid, 103 5/8 offered, a trader said.

Later in the notes moved to 103 bid, 103.40 offered. Near the end of the European session, the notes were seen at 103 bid, 103½ offered with two-way activity.

VimpelCom sells notes

In its new deal, Russia-focused telecommunications company VimpelCom priced a three-tranche issue of dollar notes due 2019 and 2023 and ruble notes due 2018, a market source said.

The deal included $600 million 5.2% notes due 2019 that priced at par to yield mid-swaps plus 395.6 bps. The notes priced tighter than talk, set at the mid-swaps plus 425 bps area.

The second dollar tranche of $1 billion 5.95% notes due 2023 priced at par to yield mid-swaps plus 390.9 bps. The notes were talked at a spread in the area of 425 bps over mid-swaps.

The third tranche, RUB 12 billion 9% notes due 2018, priced at par to yield 9%.

Barclays, Citigroup, ING and RBS were the bookrunners for the Rule 144A and Regulation S deal.

"It's coming roughly 25 bps to 35 bps wide of the curve," the analyst said.

PhosAgro prices bonds

PhosAgro, a fertilizer and phosphates company based in Moscow, sold $500 million of 4.204% notes due 2018 at par to yield mid-swaps plus 320 bps.

The notes were talked at a spread over mid-swaps in the 325 bps area.

Citigroup, Raiffeisen Bank, Sberbank and VTB Capital were the bookrunners for the Rule 144A and Regulation S deal.

"PhosAgro is coming 30 bps through Eurochem's 2017s and 20 bps over Sibur Holdings' 2018s," the London analyst said. "Several investors have expressed their willingness to support the deal even if it prices through Sibur, given its low leverage and investment grade rating."

The deal's size is a bit smaller than is typical for crossover deals, she said.

"And although we agree that it is an interesting story that adds diversity to the market, the use of proceeds of a potential issue - buying out minorities - and the substantial dividend payments are two factors that should not be neglected."

Sberbank prints notes

Also from Russia, lender Sberbank priced a CHF 200 million issue of 2.065% notes due 2017 at par to yield 2.065%, or mid-swaps plus 170 bps.

UBS, Credit Suisse and Sberbank were the bookrunners for the Regulation S deal.

And lender Vnesheconombank has mandated Barclays, Commerzbank, ING and Societe Generale as bookrunners for a benchmark-sized issue of euro-denominated notes that will be marketed during a roadshow, a market source said.

The marketing trip will begin Feb. 11 and end Feb. 13.

A Regulation S deal is expected to follow.

RusPetro cancels issuance

Russia-based oil and gas producer RusPetro plc has postponed its planned five-year issue of dollar-denominated notes, according to a company announcement.

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

Initial price talk was set at the low- to mid-11% area.

Proceeds were to be used for general corporate purposes and to repay the company's term loan.

"Given the substantial equity-like risk as well as execution risk, the bond postponement does not come as a surprise to us," the London analyst said.

No notes from Millicom

Also shelving a deal is mobile phone network provider Millicom International Cellular (Tigo), which serves Central America, South America, Southeast Asia and Africa.

The company is negotiating to merge its telecommunications operations with Empresas Publicas de Medellin (EPM).

"Because of this development, the company is postponing its new bond issue," the analyst said.

DBK sets talk

Development Bank of Kazakhstan set initial price talk in the 4.35% area for a planned increase of its dollar-denominated notes due in 2022, a market source said.

JPMorgan, VTB Capital and Halyk Finance are the bookrunners for the Rule 144A and Regulation S deal.

The lender is based in Astana, Kazakhstan.

Grupo Cementos oversubscribed

The final book for Mexico-based construction materials company Grupo Cementos de Chihuahua SAB de CV's (GCC) $260 million issue of 8 1/8% notes due Feb. 8, 2020 was $1.6 billion, a market source said.

About 78% of the orders came from the United States, 10% from Europe, 9% from Latin America and 3% from Asia.

Asset managers picked up 87%, insurers 6%, banks 4%, private banks 2% and hedge funds 1%.

The notes priced at par to yield 8 1/8% via BBVA, Citigroup and Scotia Capital in a Rule 144A and Regulation S deal.

"Retail continues to have demand for the paper," a New York-based trader said. "Some private wealth accounts have paid as high as 105 for paper. That's 18 wide to Cemex '20."

Middle East in focus

Taking a closer look at Wednesday's trading from the Middle East, the recent 2025 notes from Emirates airline bounced off Friday's low of 98¼ to close at 99.12 bid, 99.62 offered, a trader said.

Bonds from International Petroleum Investment Co. (IPIC) were popular on Wednesday, and investors showed some interest in Qatar's 2023 bond.

Demand was also strong for most bonds from Abu Dhabi National Energy Co. (TAQA). But the company's 2036s have been struggling.

"But it might be finding a level," he said.

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