Qatar National Bank, Lukoil sell bonds; absolute yields remain appealing; demand for Evraz

By Christine Van Dusen

Atlanta, April 17 - Qatar National Bank SAQ, Russia's OAO Lukoil, Mexico's Metalsa SA de CV and the Korea Export-Import Bank (Kexim) sold notes on Wednesday as spreads were unchanged or slightly tighter and investors sought out Evraz Group's 2020 notes and Russian Railways' 2021s.

Also on Wednesday, Brazil-based Aralco Finance SA postponed its deal and Brazil-based Construtora Norberto Odebrecht SA launched its issue of dollar- and real-denominated notes.

The Markit iTraxx SovX CEEME ex-EU index on Tuesday tightened 2 basis points to 193 bps over Treasuries while the corporate index was unchanged at Treasuries plus 225 bps.

"Despite relatively dovish comments from Fed speakers, US Treasuries are selling off slightly this morning," a London-based analyst said.

In trading, bonds from the Middle East and North Africa had an active start.

"More two-way on National Bank of Abu Dhabi's 2019s," the analyst said. "Meanwhile, the Dubai complex trades a little heavy, with paper around in Dubai government, Dubai Electricity and Water Authority and some corporates."

DEWA's 2015s and 2016s were "looking OK, on the bid side, to pick up paper," the London trader said. "It remains a technical market in the Gulf region space, in spite of increased volatility elsewhere."

The pipeline for upcoming deals isn't particularly crowded, he said.

"No meaningful supply on the horizon at the moment, apart from the smaller Turkish banks coming," he said. "Even with some spread widening the absolute yields are probably still appealing for borrowers, so some may look to get a deal away given this market still trades OK and the normally tricky month of May is just around the corner."

In its new deal, Qatar National Bank sold CHF 200 million notes due May 13, 2016 at par to yield Libor plus 53 bps, a market source said.

Barclays and RBS were the bookrunners for the Regulation S transaction.

Metalsa, Kexim notes price

Also on Wednesday, Mexico's Metalsa priced a $300 million issue of 4.9% notes due April 24, 2023 at par to yield 4.9%, or Treasuries plus 321 bps, a market source said.

BofA Merrill Lynch and Citigroup were the bookrunners for the deal.

Metalsa is a structural components company based in Nuevo Leon, Mexico.

And Korea's Kexim sold A$100 million 4¾% notes due April 24, 2019 (A3/A+/AA-) at 101.325, a market source said.

ANZ was the bookrunner for the deal.

Lukoil sells notes

Russia-based oil and gas company Lukoil priced a two-tranche issue of $3 billion notes due in 2018 and 2023 with bookrunners BNP Paribas and Citigroup, a market source said.

The deal included $1.5 billion notes due 2018 that priced to yield mid-swaps plus 270 bps, matching price talk.

The second tranche of $1.5 billion notes due 2023 priced to yield mid-swaps plus 285 bps, also matching talk.

The proceeds will be used for general corporate purposes.

Other details were not immediately available on Wednesday.

Odebrecht bonds launch

Brazil-based Odebrecht affiliate Odebrecht Finance Ltd. launched $550 million notes due in April 2025 at 4½% and R$500 million notes due April 2018 at 8 3/8%, a market source said.

BTG Pactual, Credit Agricole, Deutsche Bank, Santander and Scotiabank are the bookrunners for the Rule 144A and Regulation S deal.

The notes are part of a tender offer for $118.6 million of the company's outstanding 7% senior notes due 2020 and $729 million of its outstanding 6% notes due 2023.

Construtora Norberto Odebrecht is an engineering and construction company based in Sao Paulo.

Aralco puts off dollar deal

Brazil-based Aralco has postponed its planned dollar-denominated issue of notes due in 2020.

The notes had been talked at 9½%.

Banco Votorantim, Credit Suisse, HSBC, Itau BBA and Banco Pine were the bookrunners for the Rule 144A and Regulation S deal.

The notes were to be non-callable for four years.

The proceeds were to be used to refinance debt, for capital expenditures and for general corporate purposes.

The notes are guaranteed by Aralco SA, a Sao Paulo-based ethanol and sugar producer.

OAS sets talk

Brazil's OAS SA has given price guidance of 9% to 9¼% for a dollar-denominated issue of perpetual notes, a market source said.

BB Securities, Bradesco BBI, BTG Pactual, Deutsche Bank, HSBC, Itau BBA and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for capital expenditures.

OAS is a Sao Paulo-based infrastructure company.

Gayosso sets roadshow

Mexico's Grupo Gayosso SA de CV will set out on Friday for a roadshow to market an issue of notes, a market source said.

The roadshow will begin in Santiago and travel to London, Boston and New York before concluding on April 25 in Los Angeles.

JPMorgan is the bookrunner.

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

Gayosso is a funeral and cremation services company based in Col. San Rafael.

Slovenia bonds trade up

In other trading on Wednesday, Slovenia's 2022s traded up during the morning at 96 1/8 bid, 96 5/8 offered in advance of the sovereign's auction, the analyst said.

"A key test of sentiment in the region," she said, "indicating positive expectations."

And Russia-based Rosneft's 2022s traded down at 991/2.

"Turkey's 2032s are trading slightly stronger, at 103.3125," she said. "GarantiBank's 2022s are better at 107½ and Bank Asya's 2023s are showing small performance at 103.65."

Ukraine notes weaken

Looking to Ukraine, sovereign bonds have been weaker so far this week, said Svitlana Rusakova of Dragon Capital.

"Coming hand-in-hand with higher supply from the Ministry of Finance is the growing possibility of a muddle-through scenario," she said.

But as global sentiment has improved, so too did offers for Ukraine bonds.

"Corporates were a bit lower, but remained calm," she said.

Finansbank sukuk on deck

One trader was keeping an eye out for the upcoming issue of Islamic bonds planned by Turkey-based Turkiye Finans Katilim Bankasi AS (Finansbank).

The lender has mandated Citigroup, HSBC, NCB Capital and Noor Islamic Bank to arrange a roadshow starting Thursday a dollar-denominated issue of Regulation S notes.

"It faces funding diversification challenges, although this new sukuk should alleviate some of those concerns," she said.

Albaraka deal ahead

Also ahead is a dollar-denominated issue of Islamic notes from Turkey's Albaraka Turk Katilim Bankasi AS.

The lender sets on a roadshow on Thursday with BNP Paribas, Al Hilal Bank, Barwa Bank, Emirates NBD Capital and Nomura Securities for the Regulation S-only sukuk issue.

"The obvious comparison is Bank Asya's tier 2 10-year, non-call five sukuk issued in March at 7½% return," the analyst said. "The two banks are similarly rated, and although Albaraka has the weaker capitalization and margin of the two, asset quality and coverage ratios are stronger."

Middle East in focus

In more news from the secondary market, some bids were seen for notes from Bank Muscat and Emirates' 2025 bond was spotted at 98¼ bid, 98¾ offered.

"The week and month changes on Emirates' 2023 and 2025 show how these two bonds have struggled," a trader said. "And even today, I managed to cover or miss the buyers as one or two Street guys were aggressive sellers."

Later in the day, Abu Dhabi Islamic Bank's perpetuals traded at 106¼ mid after pricing at par. Dubai Islamic Bank's perpetuals, which also priced at par, moved to 102.

"Some previously lagging bank paper caught a decent bid this afternoon," the London trader said. "Perpetuals also caught a bid late in the day, with DIBs closing 102 mid, ADIB closing 106½ mid."

Two-way for Kipco

Some rare two-way flows were reported for Kipco's 2020s, which continue to hold fairly well, roughly 2 points off the high price set earlier this year, a trader said.

And bonds from the long end in Qatar are tighter by 15 bps on the month, a London-based trader said.

"But they're a little wider on the week," he said. "Qatar front-end has been super well-bid the past fortnight. Moving out of the 2014 and 2015 probably makes sense given the levels on those bonds."

SIB notes move down

Sharjah Islamic Bank's notes traded down at 99.90 after pricing last week at par.

And some nibbling was noted for higher-yielding names from the region, like Dubai Holdings' euro notes.

"It's a mixed bag in Abu Dhabi this week," he said. "Fairly balanced on International Petroleum Investment Co. (IPIC) and Abu Dhabi National Energy Co. (TAQA)."

Megaworld notes oversubscribed

The final book for Philippines-based real estate company Megaworld Corp.'s $250 million 4¼% notes due in 2023 was more than $500 million from more than 40 accounts, according to a company announcement.

The notes priced at a spread of Treasuries plus 245 bps, in line with talk, via UBS in a Regulation S deal.

The proceeds will be used for general corporate purposes.

About 98% of the orders came from Asia and the rest from Europe. Fund managers picked up 20%, banks 35%, private banks 40% and insurance companies and others 5%.

© 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.