Eurasian Development Bank taps bookrunners; Lat-Am corporates fare well; activity ticks up

By Christine Van Dusen

Atlanta, Aug. 13 - Kazakhstan-based JSC Eurasian Development Bank mandated banks for a dollar deal on a Tuesday that saw better performance from most Latin American bonds and Qatar's Qtel International.

"With some still-sticky bonds, a couple of decent buyers around locally, early doors, and some buyers, the market behaved pretty well," a London-based trader said. "It's a thin market, obviously. Issuers, I hope, are getting used to these higher yields, although with spread tightening the all-in yields are not markedly changing much on a day like today."

The Markit iTraxx SovX CEEME ex-EU index spread on Tuesday opened flat at 233 basis points over Treasuries. The Markit iTraxx Crossover index spread - seen Monday at 400 bps - narrowed by 7 bps on Tuesday.

"Asian markets generally performing better this morning driven by Japan," a London-based analyst said. "U.S .Treasuries sold off yesterday and this morning, opening at 2.64% ahead of U.S. retail sales data."

Most bonds from Central and Emerging Europe and Asia couldn't manage to catch up with the Treasury move, she said.

"Slightly more activity in the Middle East and North Africa," she said. "But overall, it's still limited activity."

Looking to Ukraine, trading has so far this week been mostly uneventful, said Svitlana Rusakova, of Dragon Capital.

Sovereign bonds were mostly unchanged while the State Export-Import Bank of Ukraine (Ukreximbank) saw some buyers for its 2015s.

Ukraine's OJSC Oschadbank saw two-way interest in its 2018s.

"Mriya Agro's 2018s were better bid and [Donbass Fuel & Energy] DTEK 2018s remained centered around 97," she said.

Some tightening for Lat-Am

From Latin America, corporate bonds were performing fairly well on Tuesday, a New York-based trader said.

"We see some spreads about unchanged and some spreads tighter," he said.

However, bonds from Mexico's America Movil SAB de CV moved a few basis points wider from the previous session.

"So we are down hard in price on the long end," he said. "The 2040s are trading just north of 200 and down 3 points in the last two days."

And good flows were seen for the 2022 notes from Mexico's Cemex SAB de CV, he said.

Brazil names in focus

Bonds from Brazil's Petroleo Brasileiro SA (Petrobras) and Vale SA were mostly unchanged on a spread basis but moved on a bit in price, the New York trader said.

Brazil-based Braskem has seen its notes tighten during the last few sessions following positive earnings results for the second quarter.

And Brazil-based Odebrecht was better offered on Tuesday.

"The 2042s are the albatross on that curve," he said. "Now trading with a 93 handle with a sprinkle of selling added in."

Codelco notes widen

The recent notes from copper mining company Corporacion Nacional del Cobre de Chile (Codelco) - $750 million 4½% notes due 2023 - were wider by as much as 4 bps on Tuesday, the New York trader said.

The notes priced at 99.864 to yield Treasuries plus 187.5 bps via bookrunners BofA Merrill Lynch, HSBC and Mitsubishi UFJ in a Rule 144A and Regulation S deal.

The proceeds will be used to pay existing debt, for general corporate purposes and for capital expenditures.

Bank paper fares well

Bank paper from Peru held in well on Tuesday, a trader said.

"Actually tightening a bit," he said.

Mexico's banking names, as well as those from Chile, were also tighter on a spread basis, though unchanged on price.

"It seems people are used to some U.S. Treasury volatility now, and are perhaps now turning a little complacent towards the moves," the London trader said. "The reaction today was fairly muted compared to what we witnessed in May. Of course there has been some decent take-out by some of the bigger portfolios regionally through June and July, so I suspect the dealing community is much lighter than they were some months back."

Two-way flows

Good two-way flows were seen for the 2017 notes from Dubai's Tamweel PJSC while better buyers emerged for Qatar, a London-based trader said.

"Flow-wise, we're still not exactly needing to turn over the page on the blotter or desperately trying to find a new pen, but it's still steady," the London trader said.

Also seeing two-way flows on Tuesday was Dolphin Energy and its 2021s. And International Petroleum Investment Co. attracted retail investors.

"Demand for Sharjah Islamic Bank's 2018s and Emaar Properties' 2019s," he said. "Emaar has had a good little run on the back of decent recent numbers."

Perpetuals move lower

Perpetual notes moved lower on Tuesday, the London trader said, with Abu Dhabi Islamic Bank's issue trading at 100.87 bid, 101.62 offered and Dubai Islamic Bank's at 97½ bid, 98¼ offered.

"But today it was all about, once again, the rates move," he said. "I'm impressed with how well some bonds are holding."

He pointed to Qatar's Qtel International and its 2021 bonds, which got a lift in trading on Tuesday.

South Africa trading

From Africa, the 2016 bonds from South Africa were trading Tuesday at 103¼ bid, 104 offered, about 35 bps tighter on the month, a trader said.

Nigeria's 2023s were also 35 bps tighter on the month, trading Tuesday within the 102 3/8 to 103. 3/8 context.

Kazakh Bank picks leads

In deal-related news, Kazakhstan-based Eurasian Development Bank mandated BNP Paribas, Deutsche Bank, HSBC and VTB Capital as bookrunners for a dollar-denominated issue of notes, a market source said.

No other details were immediately available on Tuesday.

The bank is based in Almaty, Kazakhstan.

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