UAE's Millennium Offshore sells bonds; spreads widen, inflows decline; African Bank delays

By Christine Van Dusen

Atlanta, Feb. 8 - United Arab Emirates-based Millennium Offshore Services Superholdings LLC priced notes on a Friday that saw many traders head home early in an attempt to beat the blizzard heading for the Northeastern United States.

"It is relatively quiet in EM," a London-based analyst said.

South Africa's EdCon Pty. Ltd. and Brazil's Schahin Oil & Gas Ltd. were expected to print notes during the session, but near the market's close no reports on the terms were available.

Said a London-based trader, "Balanced flow again, but volumes light."

Spreads ended the week a touch wider, with the Markit iTraxx SovX index spread moving out 1 basis point on Friday morning. The corporate index spread widened by 2 bps.

"The week has been dominated by stock market weakness, with US Treasuries rallying," the analyst said. "Emerging markets debt funds saw continued inflows this week with $1.3 billion, down slightly on last week. But almost all of that was local currency."

Hard currency-focused funds saw outflows of $300 million, she said, and blended currency funds' inflows totaled $273 million.

In trading on Friday, the recent issues out of Russia received some attention.

"Long-end VimpelCom has settled after suffering yesterday, but Credit Bank of Moscow and PhosAgro are both seeing ongoing demand," the analyst said.

Activity was muted for assets from Latin America, a New York-based trader said.

"Slow start so far after an interesting day yesterday in terms of price action and price movement," he said.

Tightening continued for such names as Brazil's Petroleo Brasileiro SA (Petrobras) and Vale SA. And bids improved for Brazilian meat processing companies, he said.

"Real-money selling has definitely tapered," he said.

Middle East in focus

The perpetual notes from Abu Dhabi Islamic Bank closed Friday at 103.80 on the bid side after Thursday's level of 103 3/8 bid, 103¾ offered. The notes recently priced at par.

"More two-way on International Petroleum Investment Co. 2022s today between 115.55 and 1153/4," he said. "The euro notes have been popular all week."

Good demand also was noted for paper due in 2014, particularly from Qtel International, Commercial Bank of Qatar and Mubadala.

Millennium Offshore does deal

United Arab Emirates-based rig provider Millennium Offshore Services priced a $225 million issue of five-year senior secured notes at par to yield 9½% on Friday, market sources said.

The yield printed on top of the yield talk.

Initial guidance was in the low-to-mid 9% yield context, according to an investor.

Goldman Sachs was the lead.

Proceeds will be used to fund a dividend to shareholders.

EdCon sets talk

South Africa-based retail company EdCon set price talk at the 97 area for a €325 million issue of 9½% notes due in 2018, a market source said.

The company scrapped plans for a $200 million issue of notes due in 2018, also talked at the 97 area.

Barclays, Goldman Sachs, Morgan Stanley, BofA Merrill Lynch and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to finance the repurchase of the company's floating-rate notes due in 2014.

African Bank postpones

In other deal-related news from South Africa, lender African Bank Ltd. has postponed a $300 million issue of seven-year notes in light of a regulatory investigation, a market source said.

The Johannesburg-based lender could face a fine worth $34 million for an alleged "reckless lending allegation," the company said in a statement. "Given that this was an isolated incident as a result of fraudulent activities and the organization has suffered a consequential financial loss, African Bank believes the fine is unwarranted."

Credit Suisse, Goldman Sachs, Rand Merchant Bank and Standard Chartered Bank were the bookrunners for the Regulation S-only deal.

GOL prints notes

This followed the late-Thursday pricing of Brazilian airline GOL Linhas Aereas Inteligentes SA's $200 million issue of 10¾% notes due 2023 at 98.506 to yield 11%, a market source said.

BB Securities, BofA Merrill Lynch, Bradesco BBI and Citigroup were the bookrunners for the Rule 144A and Regulation S deal.

VimpelCom oversubscribed

Taking a closer look at the recent VimpelCom deal, the combined final book for the telecom company's two-tranche issue of dollar notes due 2019 and 2023 was more than $9.5 billion from about 675 orders.

And the company's ruble notes due 2018 drew more than RUB 17 billion.

The dollar deal included $600 million 5.2% notes due 2019 that priced at par to yield mid-swaps plus 395.6 bps. That tranche drew 59% of its orders from the United States, 19% from the United Kingdom, 11% from Europe, 9% form Russia and 2% from Asia and others.

Fund managers accounted for 75%, banks and private banks 16%, insurers and pensions 8% and others 1$.

VimpelCom's second dollar tranche of $1 billion 5.95% notes due 2023 priced at par to yield mid-swaps plus 390.9 bps.

About 58% of the orders for that tranche came from the United States, 22% from the United Kingdom, 10% from Europe, 7% from Russia and 3% from Asia and others. Fund managers picked up 72%, banks and private banks 17%, insurers and pensions 6.5% and others 4.5%

The third tranche, RUB 12 billion 9% notes due 2018, priced at par to yield 9%. About 74% of the orders came from the United States, 15% from the United Kingdom, 6% from Europe, 4% from Russia and 1% from Asia and others. Fund managers accounted for 82%, banks and private banks 16%, insurers and pensions 1% and others 1%.

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

PhosAgro draws $2.6 billion

Also oversubscribed was Russia-based fertilizer and phosphates company PhosAgro's recent $500 million issue of 4.204% notes due 2018.

The notes priced at par to yield mid-swaps plus 320 bps via Citigroup, Raiffeisen Bank, Sberbank and VTB Capital in a Rule 144A and Regulation S deal.

The final book was about $2.6 billion, with 54% from the United States, 21% from Europe, 12% from Russia, 11% from the United Kingdom and 2% from others.

Fund managers took up 69%, banks and private banks 23%, insurers and pension funds 5% and hedge funds and others 3%.

Guatemala in demand

Guatemala's new issue of $700 million issue of 4 7/8% notes due 2028 attracted $3.5 billion orders from 170 accounts, a market source said.

The notes priced at 98.692 to yield 5%, or Treasuries plus 303.10 bps with bookrunner HSBC in a Rule 144A and Regulation S transaction.

About 71% of the orders came from the United States, 28% from Europe and 1% from Asia.

Fund managers took up 70%, banks and private banks 15%, insurers and pension funds 10% and hedge funds and others 5%.

Paul A. Harris contributed to this article.

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