EM bonds have 'amazing start to April'; Gazprom Neft plans notes; Costa Rica picks banks

By Christine Van Dusen

Atlanta, April 4 - Emerging markets assets on Thursday were once again strong in trading, with perpetual notes continuing to hold favor and several issuers - including Russian Railways, Lebanon, South Africa and the Dominican Republic - taking steps toward printing new deals.

The market traded very well on Thursday as U.S. Treasuries pushed through 1.8% and some "very decent" allocations were given to high-grade bonds, a London-based trader said.

"Difficult liquidity and a trading community perhaps slightly wrong-footed saw cash prices perform well," he said.

The Markit iTraxx SovX CEEME ex-EU index spread widened by 1 basis point to Treasuries plus 211 bps while the corporate index was unchanged at 243 bps over Treasuries.

"An amazing start to April," the London trader said. "Flow-wise, electronically, at least was fairly balanced."

Abu Dhabi Islamic Bank's recent perpetual notes that priced at par traded Thursday at 106¾ bid, 107¼ offered before closing at 106¾ bid, 107¼ offered.

Dubai Islamic Bank's perpetuals, which also priced at par, traded at 102.65 bid, 103.05 offered. They ended the session at 102¾ bid, 103¼ offered.

"The week has been a very impressive one so far for the perps and subs, with solid demand," a London-based analyst said.

Abu Dhabi Commercial Bank's 2023s were trading in the high 103s after pricing at par while Emirates NBD's 2023s moved to 102 after pricing at par.

"International Petroleum Investment Co.'s 2041s jumped a couple of points," a trader said. "And there's ongoing demand for Saudi Electricity Co.'s 2043s, closing at 103 mid."

Notes from Emirates airline were active on Thursday, with both the 2023s and 2028s trading through 99.

QNB trades up

The recent CHF 300 million issue of 3 1/8% notes due Jan. 12, 2015 that Qatar National Bank SAQ sold at par traded Thursday at 103.62 bid, 104 offered.

The notes came to the market at a spread of Libor plus 40 bps via UBS and QNB Capital in a Regulation S deal.

"With some buying of EM assets over the last few days, at the start of the second quarter, we are marking up prices," a trader said.

Buyers for Russian corporates

Russian corporates were in demand in trading on Thursday.

"Vimpelcom, TMK, Severstal, PhosAgro, Sibur, VEB, Gazprom, NLMK and Evraz have all seen buying over the last 48 hours in Russia," a trader said.

Some small buying also was noted for Yapi ve Kredi Bankasi AS and other Turkish banking names, the analyst said, as well as for Turkey sovereign's long end.

Ukraine bonds get a lift

Long-dated notes from Ukraine have been moving up in trading, said Svitlana Rusakova of Dragon Capital.

"Tuesday's action continued," she said. "Sovereigns were lifted in several pushes but faced some resistance."

Demand was seen for Avangard, as well as for the 2020 notes from MHP and the 2018s from DTEK.

"It was a strong session, overall," she said.

Tata sets talk

Tata International Singapore Pte. Ltd., part of India's Tata Group, set price talk for a Singapore dollar-denominated issue of notes due in five years at 4.3%, a market source said.

RBS is the bookrunner for the Regulation S deal.

The notes include a change-of-control put at 101 if Tata Group ceases to own at least 50% of the voting securities for Tata International Ltd.

Tata International is the trading arm of the Tata Group, a Mumbai-based company that focuses on manufacturing and supply chain integration.

Russian issuers in focus

Russian Railways will set out on April 8 on a roadshow for a euro-denominated issue of notes, a market source said.

Societe Generale, Natixis, RBS and VTB Capital are the bookrunners for the deal.

And Russia's JSC Gazprom Neft is planning to issue as much as $1 billion of notes this month, a market source said.

No other details were immediately available on Thursday.

Gazprom Neft is a Moscow-based oil producer and part of gas company OJSC Gazprom.

Lebanon mandates bookrunners

Lebanon has mandated Fransa Invest Bank SAL, Natixis and Standard Chartered Bank as bookrunners for a dollar-denominated issue of notes, a market source said.

The Regulation S deal is expected to launch in the near future.

South Africa taps leads

South Africa has mandated BNP Paribas and Standard Bank to arrange a non-deal roadshow from April 15 to 19, a market source said.

The roadshow will begin in New York and London, then travel to Boston, Frankfurt, Munich, San Francisco, Newport Beach before concluding in Los Angeles.

And Costa Rica has mandated Barclays and Deutsche Bank for a dollar-denominated issue of notes.

Dominican Republic roadshow

The Dominican Republic has mandated Citigroup and Deutsche Bank for a roadshow from April 8 to April 10 for a dollar-denominated issue of notes, a market source said.

The roadshow will begin in Los Angeles and travel to London and Boston before wrapping up in New York.

A Rule 144A and Regulation S deal is expected to follow.

BBVA oversubscribed

The final book for Peru-based BBVA Banco Continental SA's $500 million issue of 3¼% notes due April 8, 2018 was $3 billion from more than 210 accounts, a market source said.

About 65% of the orders came from the United States, 14% from Latin America, 1% from Asia and 20% from emerging Europe, the Middle East and Africa.

The notes priced at 99.425 to yield 3.376%, or Treasuries plus 265 bps via BBVA, BofA Merrill Lynch and Goldman Sachs in a Rule 144A and Regulation S deal.

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