EM bond funds see better inflows; Mubadala plans deal; Gulf region bonds better offered

By Christine Van Dusen

Atlanta, April 11 - Emerging markets bond funds ended the week with better inflows as investor sentiment improved and Abu Dhabi-based Mubadala Development Co. PJSC sought to issue international notes.

The funds saw inflows of $1.8 billion for the week, up from $1.1 billion the previous week, a London-based analyst said.

"This suggests a significant improvement in market sentiment," she said.

In trading, emerging markets bonds ended the week a bit wider on news that Turkey's sovereign rating had been placed on negative outlook by Moody's Investors Service.

Banks from Russia also opened wider at the end of the week, while corporates remained unchanged, a trader said.

Looking to the Middle East, most bonds were better offered during a "fairly soggy session," a London-based trader said.

"Liquidity is obviously poor, with locals out, but for the balance the Street was a seller of paper," he said.

Abu Dhabi Commercial Bank's 2019s traded down a few times while Aldar Properties PJSC's 2018s held just north of 103, he said.

"It feels like there are buyers around on Dubai Electricity and Water Authority's shorted-dated, still," he said. "The impressive run continues for International Petroleum Investment Co.'s long-dated 2041s, which were trading above the 129 cash price. The front end is a rock."

Perpetual bonds from the Gulf region were better offered, though volumes were limited, he said.

"Dar al Arkan Holdings' 2016s and Emirates Islamic Bank's perpetuals were popular," he said. "They probably share the 'bond of the week' award."

Zenith prices bonds

On Thursday, Nigeria's Zenith Bank priced $500 million 6¼% notes due 2019 to yield 6½%, or Treasuries plus 485 basis points, a market source said.

The notes were talked at a yield in the high-6% area.

Citigroup and Goldman Sachs were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to finance project loans.

Zenith is a lender based in Lagos, Nigeria.

China Unicom does deal

Also on Thursday, China Unicom (Hong Kong) Ltd. sold RMB 4 billion 4% three-year senior notes at par to yield 4% on Thursday, according to an informed source.

Bank of China, CICC HK Securities, JPMorgan and Nomura Securities were the bookrunners for the Regulation S notes.

Proceeds will be used for working capital and general corporate purposes.

The telecommunications services provider is based in Hong Kong.

Citic issues notes

China's Citic Bank priced a $300 million issue of 7¼% notes due 2019 at par to yield 7¼%, a market source said.

Citigroup, HSBC, RBS, ANZ, BBVA and CLSA were the bookrunners for the Regulation S deal.

Citic Bank is based in Hong Kong.

Issuance from Empresa Nacional

Chile's Empresa Nacional de Electricidad SA sold $400 million 4¼% notes due 2024 at 98.980 to yield 4.377%, or Treasuries plus 175 bps, according to a company filing.

BBVA and JPMorgan were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general corporate purposes.

The issuer is a generator and supplier of electricity, based in Santiago.

Abengoa oversubscribed

The new issue of $432 million 6 7/8% notes due 2043 from Peru-based Abengoa Transmision that came to the market at 99.995 to yield 6 7/8% drew a final order book of $1.9 billion from more than 100 investors, a market source said.

About 79% of the orders came from North America, 12% from Latin America, 1% from Asia and 8% from Europe, the Middle East and Africa.

Asset managers picked up 63%, insurers and pension funds 27%, banks 6% and others 4%.

BNP Paribas and HSBC were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repay debt, terminate any debt swaps and fund debt service reserve accounts.

Hang Lung draws orders

The final book for Hang Lung Properties' new $500 million issue of 4.45% notes due 2021 was $1.9 billion from more than 110 accounts, a market source said.

HSBC and JPMorgan were the bookrunners for the Regulation S deal.

About 95% of the orders came from Asia and 5% from Europe, with fund managers picking up 55%, banks 21%, insurers 11%, private banks 11% and corporates 2%.

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