Slovakia sells notes; spreads tighten; higher-yielders get the most love; Kexim sets talk

By Christine Van Dusen

Atlanta, Feb. 20 - Slovakia priced a euro-denominated issue of 10-year notes on Wednesday, as investors bought notes with a 2014 maturity and sold paper from names like Qtel International, Abu Dhabi National Energy Co. (TAQA) and International Petroleum Investment Co. (IPIC).

"Spreads are generally tighter," a trader said.

Indeed, the Markit iTraxx SovX index spread was seen at Treasuries plus 172 bps, 3 bps narrower, while the corporate index tightened 7 bps.

"The market held in pretty well, once again," a London-based trader said. "Higher-yielders are still trading OK. Once again the resilience of the lower-beta space has been impressive."

The TAQA curve traded well, with the 2023s about 27 basis points tighter on the month.

"In saying that, the 2036 has come off about 7 or 8 points from the high and went through today at 126 cash price," he said.

IPIC's 2041s traded Thursday at 1353/4, unchanged for the month on a spread basis.

"Feels like there's some paper around after a good run," he said.

Two-way activity was noted for Bahrain's 2020s and 2022s, and demand was seen for notes from Russia's Gazprombank.

"The Russia benchmark 2030s are a couple tighter," a London-based analyst said. "We continue seeing better buyers of Turkish corporates across the board."

Particular standouts included the 2017 notes from Halkbank and Garantibank.

"The laggard Vakifbank 2017s are also on the move today," she said.

On the deal front, several issuers made progress on planned deals, including Croatia, Russia's Sberbank, Export-Import Bank of Korea (Kexim), Ukraine's Privatbank, Mexico's Tenadora Nemak SA de CV and Korea Housing Finance Corp.

Slovakia prices bonds

In its new deal, Slovakia priced a €1.75 billion issue of 3% notes due 2023 at 98.898 to yield 3.13%, or mid-swaps plus 122 bps, a market source said.

Deutsche Bank, ING, Societe Generale and Erste Group were the bookrunners for the Regulation S deal.

The final book was more than €2.2 billion from 190 accounts.

And Croatia mandated BofA Merrill Lynch, Deutsche Bank, Goldman Sachs and JPMorgan for a bond issue that is expected to come to the market in March.

Sberbank mandates bookrunners

Russia-based lender Sberbank has mandated HSBC, JPMorgan and Sberbank CIB to lead a roadshow for a Turkish lira-denominated issue of notes, a market source said.

The roadshow for the Regulation S deal began Wednesday and will take place in London.

And Korea's Kexim set initial price talk at the Treasuries plus low-100 bps area for its dollar-denominated issue of five-year notes.

Kexim, BofA Merrill Lynch and SEB Enskilda are the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used to extend loans to support projects that promote the transition to low-carbon and climate-resilient growth, according to a company filing.

Privatbank gives guidance

Also on Wednesday, Ukraine-based lender Privatbank gave initial price guidance in the 10 7/8% area for dollar-denominated five-year notes via Credit Suisse, JPMorgan and UBS in a Rule 144A and Regulation S deal.

And Mexico's Tenadora set the tenor for its dollar-denominated issue of notes at 10 years, a market source said.

Citigroup, Credit Suisse and Morgan Stanley are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repay bank indebtedness and for general corporate purposes.

Tenadora Nemak is a Garcia, Mexico-based producer of aluminum engine blocks, cylinder heads and transmission components. It is controlled by Alfa SAB de CV.

Roadshow for Korea Housing

For another upcoming deal, Korea Housing Finance is on a roadshow for a dollar-denominated issue of three-year notes backed by Korean residential mortgages.

Citigroup, Nomura and Standard Chartered Bank are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow began Wednesday and will be held in Asia, Europe and the United States.

Ferrexpo cancels issuance

In other news, Ukraine-based iron ore company Ferrexpo plc has canceled its plans for a dollar-denominated issue of five-year senior notes due the current market environment, according to a company announcement.

"The company has decided not to proceed with a bond transaction at this time given the widening in credit spreads since the beginning of February, the group's current robust liquidity position and other available sources of financing," the statement said. "Ferrexpo intends to maintain a long-term dialogue with investors and will continue to review the international debt capital markets as a potential source of financing."

Morgan Stanley and Credit Suisse were the bookrunners for the Rule 144A and Regulation S offering.

Proceeds were to be used for general corporate purposes.

Ukraine bonds trade up

Also from Ukraine, sovereign bonds have been strengthening, though some paper has been available for the 2022 notes, said Svitlana Rusakova of Dragon Capital.

The 2017s were spotted trading up at 108¾ bid, 109¾ offered.

"High-yielding illiquid names remained in demand," she said.

Abu Dhabi corporates in focus

Meanwhile, Abu Dhabi Islamic Bank's recent $1 billion 6 3/8% perpetual Islamic bonds that priced at par traded Wednesday at 104 bid, 104.40 offered, a trader said.

The sukuk came to the market via Abu Dhabi Islamic Bank, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S-only deal.

On Tuesday, the notes were sighted at 104 1/8 bid, 104 3/8 offered.

Most notes from TAQA performed well on Wednesday, ahead of a planned issue of $800 million bonds.

The proceeds will be used to refinance debt.

"Impressive moves on the month, apart from the 2036s," a trader said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.