New issues from Indonesia, Hongkong Land Finance; spreads widen; Kookmin roadshow ahead

By Christine Van Dusen

Atlanta, Jan. 8 - Indonesia and Hongkong Land Finance (Cayman Islands) sold notes on Wednesday as the Federal Reserve released minutes from its December meeting that showed most officials favored the tapering of bond purchases.

"Investors look for the strength of support for tapering and any economic signals as to what could drive the rate of tapering," a London-based analyst said. "Russia remains largely out of the office today, so EM markets are thin as a result."

Still some buyers were seen for Russian corporates Mobile Telesystems OJSC, VTB Bank and OAO Sibur Holdings, she said.

"Other names are generally softer," she said.

Overall, flows were a bit more active and balanced on Wednesday, a London-based trader said.

"The stronger-than-expected [payrolls] number pushed the U.S. Treasury market lower, which just took the shine off an otherwise fairly well-supported market," he said.

The Markit iTraxx SovX index spread was at Treasuries plus 215 basis points on Wednesday, wider by 2 bps from Tuesday. The corporate index widened 3 bps to 253 bps over Treasuries.

"Turkey is a little softer this morning," the analyst said. "Fitch released a report yesterday on Turkey which indicated an imminent downgrade is unlikely, although it did suggest that longer term, the rating could face pressure."

Meanwhile, bonds from the Middle East continued to do well, the London trader said.

"Some good portfolio adding from some bigger books has been seen over the past few days," he said.

In deal-related news, roadshows were set for Paraguay's Banco Regional SAECA and South Korea's KB Kookmin Bank.

Lat-Am widens

Bonds from Latin America were lower and wider on Wednesday after stronger previous sessions this week, a New York-based trader said.

"Today brought us back to a healthy dose of reality," he said. "It looked to be mostly the result of dealers making a decision to stay in front of what could be an aggressive pipeline awakening in Latin America, upcoming."

Better selling was reported on Wednesday, he said, as bonds from Brazil's Petroleo Brasileiro SA (Petrobras) and Brazil's Vale SA widened as much as 7 bps.

DP World notes tighten

Dubai-based DP World's notes have tightened as much as 28 bps on the week.

"Front-dated bonds are very tight and hard to source," the trader said.

Sellers were reported for Abu Dhabi-based Aldar Properties PJSC's 2014s and 2018s.

"The yield on the 2018s appeals to locals," he said. "For a place to park cash until May, the Aldar dollar 2014 is the place to be."

Tuesday also saw bonds from Kuwait inch higher, with buyers of Kipco.

"Perpetuals were lower on the day, having had a good start to the year," he said. "It's certainly nothing major."

Two-way flows for Dolphin

Two-way flows were seen for Dolphin Energy's 2021s, the trader said.

"We saw further bids on Bahrain names," he said, citing Batelco. "International Petroleum Investment Co. has been well-bid lately, especially the 2017s and 2020s, which are both about 30 bps better on the month."

Ukraine bonds perform

Taking a look at Ukraine, bonds have been stronger so far this week, said Svitlana Rusakova of Dragon Capital.

The big outperformers have been the sovereign's 2016s and 2017s, she said, which have seen yields tightening 100 bps or more.

"The long end is not far behind," she said. "As the sovereign marches higher, yield pickups in quasi-sovereigns get more attractive, generating demand. And no sellers at all in the corporates."

Indonesia prices bonds

Indonesia priced a $4 billion, two-tranche issue of notes (expected ratings: Baa3/BB+/BBB-) in a Rule 144A and Regulation S deal via bookrunners BofA Merrill Lynch, Citigroup and Deutsche Bank, a market source said.

The deal included $2 billion 5 7/8% notes due 2024 that priced at 99.441 to yield 5.95%, matching talk.

The second tranche - $2 billion 6¾% notes due in 2044 - came to the market at 98.734 to yield 6.85%. That was on the tight end of talk, set at 6.85% to 6.9%.

Hongkong Land sells notes

Hongkong Land Finance priced $400 million 4 5/8% notes due Jan. 16, 2024 (A2) at 99.328 to yield 4.71%, or Treasuries plus 175 bps, a market source said.

DBS, HSBC and Standard Chartered Bank were the bookrunners for the deal.

The issuer is a property development group.

Poland launches notes

Poland has launched a €2 billion issue of 10-year notes at mid-swaps plus 87 basis points, a market source said.

BNP Paribas, Citigroup, Societe Generale and Unicredit are the bookrunners for the Regulation S deal.

Market-watchers were also whispering about possible upcoming issuance from Latvia and Israel.

Banco Regional sets roadshow

Paraguay-based lender Banco Regional will set out on Friday for a roadshow to market a possible issue of notes, a market source said.

Citigroup and Deutsche Bank are the bookrunners for the Rule 144A and Regulation S transaction.

The trip will begin in Santiago and travel to London, Los Angeles, Geneva, Zurich and Boston before concluding on Jan. 15 in New York.

Marketing trip for Kookmin

South Korea's Kookmin Bank will embark on a roadshow starting Monday, a market source said.

BofA Merrill Lynch, Citigroup, Deutsche Bank, JPMorgan, Societe Generale and Standard Chartered Bank are arranging the marketing trip.

The roadshow will begin Jan. 13 in New York and travel to Philadelphia, New Jersey and Boston before wrapping up on Jan. 16 in Los Angeles.

A bond transaction may follow, subject to market conditions.

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