Big renminbi issue from World Bank at end of volatile week, month; America Movil tap ahead

By Christine Van Dusen

Atlanta, May 31 - The International Bank for Reconstruction and Development priced notes on Friday as emerging markets assets finished off a hectic week with wider spreads amid concerns about rising rates.

The spread moves were most obvious for names like International Petroleum Investment Co. (IPIC), Abu Dhabi National Energy Co. (TAQA), Dubai, Dolphin Energy, Qtel International and Qatar.

"This highlights where international investors have been long and have trimmed positions," a trader said.

IPIC's 2022 bond, for one, closed the month 7 basis points wider.

"Hardly collapsing, but it has felt a lot worse than it is by being down 3 points from the highs," he said.

TAQA's notes were between 5 bps and 15 bps wider, depending on the bond.

The recent perpetual notes from Emirates NBD and Abu Dhabi Commercial Bank's subordinated notes "got killed, as they literally printed their deals before the tidal wave swallowed up the unsuspecting punters left holding the bonds," the trader said. "Those two dropped 4 to 6 points."

Meanwhile, notes from Lebanon suffered, but the Bahrain sovereign and Bahrain Telecommunications Co. (Batelco) traded well and were tighter on a spread basis.

"Limited interest and prices drifting lower over the month," he said. "This market has been a buy-on-dip story for some time now. It will be interesting to see if this still holds in June or whether it's now shifted to a sell-the-rallies."

In deal-related news, China's Lenovo Group Ltd. mandated bookrunners for an upcoming dollar-denominated deal, and Mexico's America Movil SAB de CV is looking to price another increase of its existing 2022 notes.

World Bank prices notes

In its new deal, the World Bank sold RMB 1.7 billion 2% notes due 2014 at par to yield 2%, according to an announcement from the lender.

HSBC was the bookrunner for the transaction, which was the largest-ever offshore renminbi bond offering from a supranational issuer.

Central banks and officials took 42%, banks and private banks 28% and fund managers and insurance companies 30% of the transaction.

About 39% of the orders came from the Americas, 34% from Europe and the Middle East and 27% from Asia.

The international financial institution aids developing countries and is based in Washington, D.C.

Funds see outflows

Emerging markets bond funds saw outflows of $242 million for the week ended May 29, according to a new report from data-tracker EPFR Global.

This was the first time the funds had seen outflows in 51 weeks, the report said.

The outflows were concentrated in funds with hard-currency mandates.

"Inflow and outflow data is key to the EM asset class, and with the spike in volumes one would expect some overweights perhaps to be pared down," a trader said.

Lat-Am widens

Looking to Latin America, corporate bonds moved lower and wider at the end of the week, a New York-based trader said.

High-grade names continued to move lower on Friday on economic news from the United States.

"Turned things real sour, in a heartbeat," he said. "We are seeing sellers across all account bases, particularly Latin American private banking clients."

Street bids were difficult to come by, he said.

"To cut positions you must be a very willing seller," he said. "There are obviously no negotiations to the bids."

Ukraine bonds tick down

Sovereign bonds from Ukraine continued to move a bit lower at the end of the week, said Svitlana Rusakova of Dragon Capital.

"Seems like the market is pre-occupied with bigger themes and has, to some degree, ignored Ukraine in the last few days," she said.

From the corporate sector, the recent issue of 9½% notes due 2018 from the State Administration of Railways Transport of Ukraine (Ukrzaliznytsia) were well bid at 991/2. The notes priced at par with Barclays, Morgan Stanley and Sberbank in a Rule 144A and Regulation S deal.

Hungary sees sell-off

From Hungary, local currency bonds have experienced a serious sell-off, according to a report from Erste Group Research.

The long end of the curve has moved as much as 2 to 3 points.

"Although the weakness has been evident across the board in Central and emerging European markets, local currency Hungarian bonds underperformed," the report said.

Afreximbank trades lower

Cairo-based African Export-Import Bank's new $500 million issue of 3 7/8% notes due 2018 that priced at 99.282 moved to 98.20 bid, 98.70 offered on Friday, a trader said.

The notes priced to yield mid-swaps plus 287.5 bps via HSBC, Commerzbank, Mitsubishi UFJ Securities and Standard Bank in a Regulation S deal.

The market's overall pullback in prices isn't bad news, he said.

"It has been healthy and a good wake-up call that the era of liquidity has propped up a plethora of asset prices," he said.

Lenovo taps bookrunners

In deal-related news, China-based technology company Lenovo Group has mandated Credit Suisse, Goldman Sachs, BNP Paribas, Bank of China, HSBC, Mitsubishi UFJ Securities, Mizuho Securities, RBS and Standard Chartered Bank for a dollar-denominated issue of notes, a market source said.

And Mexico-based telecommunications company America Movil is looking to price as much as Ps. 5 billion in another tap of its 6.45% notes due 2022 in a Securities and Exchange Commission-registered deal.

In February the company priced a Ps. 7.5 billion add-on to the notes at 105.129 to yield 5.76%.

BBVA, Citigroup, Credit Suisse, Deutsche Bank, HSBC and Morgan Stanley were the bookrunners for the SEC-registered transaction.

The existing size of the issue is currently Ps. 22.5 billion.

Uni-President oversubscribed

The final book for juice drinks and noodle company Uni-President China Holdings Ltd.'s recent issue of RMB 1 billion 3½% notes due 2016 was RMB 2.8 billion from 65 accounts, a market source said.

The notes priced at par to yield 3½% via ANZ, DBS Bank, BofA Merrill Lynch and Mizuho Securities in a Regulation S deal.

About 40% of the orders went to Taiwan, 31% from Singapore and 29% from Hong Kong.

Asset managers picked up 48 ½%, banks 34%, private banks 11½% and corporates 6%.

The proceeds will be used for general working capital purposes.

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