Issues from Kuwait's Kipco, Chile's Metro de Santiago; investors eye Fed; Ukraine rallies

By Christine Van Dusen

Atlanta, Jan. 29 - Kuwait Projects Co.'s (Kipco) and Chile's Empresa de Transporte de Pasajeros Metro SA (Metro de Santiago) priced bonds on Wednesday as investors focused on recent Central Bank actions and the Federal Reserve's decision to move forward with tapering.

"Yesterday was dominated by central banks as the Central Bank of Turkey aggressively hiked key interest rates," a London-based analyst said. "We also saw India's Central Bank increase the repurchase rate to 8% to combat inflation."

Meanwhile, Turkey's 2024 bonds traded up as much as 3½ points from Tuesday's close but eventually settled a little lower, the analyst said.

"We are seeing two-way flow in banks and corporates," she said. "Russia is quieter this morning, although we are seeing some demand for Vimpelcom, currently holding their investor conference in London."

Bonds from the Middle East and North Africa were "relatively balanced," she said. "A couple of basis points tighter."

Issues from Ukraine rallied into mid-week as the prime minister tendered his resignation and a partial compromise was reached between the government and protestors, said Svitlana Rusakova of Dragon Capital.

"The Russian loans and gas deal were first questioned and then confirmed by Putin, and then questioned again," she said. "Finally, Standard & Poor's downgraded Ukraine to CCC+, citing 'political turmoil.'"

Ukraine's quasi-sovereigns and corporates have lagged, rising about 1½ points, she said.

From Africa, Angola saw some buying, as did Africa-focused Afren plc and its 2020 dollar notes, a trader said.

"Did see small nibbling on Ghana and Gabon throughout the day," he said. "[South Africa] went out about 10 basis points to 12 bps wider."

African corporates were a mixed bag, he said.

Middle East in focus

Saudi Arabia, which committed another $2 billion in aid to Egypt, saw its bonds better bid on Wednesday, a trader said.

And buyers were spotted for Qatar's Qtel International and Dolphin Energy.

"We saw some demand for International Petroleum Investment Co. as the day went on," he said. "Feels like some DP World 2037s came out, as they close almost 15 bps wider."

The Gulf region remains "a very defensive part of the world to invest in, but certainly it is not going to be immune from the global growth story, especially if the oil price starts to be affected," he said.

Puma notes dip

The new issue from Singapore's Puma Energy Holdings Pte. Ltd. - a $750 million issue of seven-year senior notes that priced at par to yield 6¾% on Tuesday - closed at 99¼ bid, 99½ offered, a trader said.

"Came, and dropped, but good size going through at 99¾ mid-afternoon," he said.

The yield printed on top of talk.

Goldman Sachs International and SG CIB were the joint global coordinators. ING, Natixis, RMB and Standard Bank were joint bookrunners.

Proceeds will be used to refinance debt and fund development.

The Singapore-based midstream and downstream oil group has refined petroleum products supply, storage and distribution operations in Central America, the Caribbean, Africa and Australia.

Kipco sells notes

In its new deal, Kuwait-based Kipco priced a $500 million issue of 4.8% notes due 2019 at par to yield 4.8%, or mid-swaps plus 314.4 bps, a trader said.

The notes were talked at a yield in the low-5% area.

"Looks in line with the existing curve," he said Wednesday morning.

BNP Paribas, HSBC and JPMorgan were the bookrunners for the Regulation S deal.

The notes opened at par bid, 100¼ offered before trading at 99.85 bid, 100.15 offered.

"Saw buyers emerge as the day wore on," he said.

Chile metro prices bonds

Chile's Metro de Santiago priced $500 million 4¾% notes due 2024 at 99.246 to yield 4.846%, or Treasuries plus 210 bps, a market source said.

BBVA and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to fund capital expenditures and for general corporate purposes.

The company is Chile's state-owned mass transport firm, which manages Santiago's rapid transit system.

Russian rail deal ahead

Investors on Wednesday were awaiting the upcoming nine-year issue of euro-denominated notes from Moscow's Russian Railways Co., which is expected to come to the market on Thursday or Friday.

Barclays, Citigroup, JPMorgan and VTB Capital are the bookrunners for the Regulation S deal.

"Taking into account the market situation and spreads to the swaps in euro of traded issue Russian Railways 2021, the fair yield of a new issue of Russian Railways' 2023s denominated in euro, in our opinion, will be calculated on the basis of the premium to average market swaps amounting to 230 bps to 235 bps," according to a report from UFS Investment Co.

"In this regard, the placement will be interesting if the issuer offers a premium to average market swaps in the amount of not less than 240 bps," the report said. "The target yield on the eurobond and opening of the book of applications is expected on Thursday and Friday of the current week."

Suntec draws orders

The recent S$200 million issue of 3.35% notes due 2020 from Singapore-based Suntec REIT MTN Pte. Ltd. was oversubscribed with orders from 29 accounts, a market source said.

The notes priced at par via ANZ, DBS and Standard Chartered Bank in a Regulation S deal.

About 95% of the orders came from Singapore and 5% from others, with 40% from fund managers, 31% from insurers, 18% from banks and 11% from private banks.

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