EM begins to recover from recent widening; some issuers on deck; buyers emerge for Cemex

By Christine Van Dusen

Atlanta, Oct. 16 – Flows and activity picked up on Thursday for many risky assets as the markets recovered somewhat from the recent Treasuries-related pummeling.

“A semblance of some sort of stability and a back-up in rates soothed the market after yesterday’s beating and widening,” a London-based trader. “Still a very decent move in rates, but nothing versus yesterday’s wild gyrations.”

Investment-grade bonds were among the most popular during the session, with demand noted for names like Abu Dhabi National Energy Co. and International Petroleum Investment Co.

“On the flipside, Bahrain, parts of Dubai and high-yield members of this market feel offered and heavy,” he said. “Perpetuals are holding well and typically trading OK.”

Elsewhere in emerging markets, Russia and Ukraine were again in focus as their presidents prepared to meet on Friday in Milan to discuss the ongoing conflict, a London-based analyst said.

“Developments in Ukraine over the next week will be important, given the upcoming European Union review of the situation,” he said.

From Latin America, the tone was better on Thursday for corporate bonds, a New York-based trader said, with some credit trading higher and closing with a moderate 10-basis points swing on the day.

Though names like Brazil’s Petroleos Brasiliero SA opened as much as 6 bps wider, a reversal in Treasuries at mid-morning allowed the tone to turn slightly positive.

Buyers were seen for most bonds, with Mexico-based Cemex SAB de CV finally getting some attention and a small boost to the curve, he said.

And corporate bonds from Chile and Peru were mostly quiet on Thursday, he said.

TSKB deal on deck

In other news, Turkey’s Turkiye Sinai Kalkinma Bankasi AS (TSKB) continued its roadshow for a dollar-denominated issue of notes that could total $350 million, he said.

Citigroup, Commerzbank, ING and Standard Chartered Bank are the bookrunners for the Regulation S deal.

“We think investors will like TSKB’s business profile and metrics, but it could potentially require a sizeable new issue premium to the [Turkiye Is Bankasi AS (Isbank)] curve,” the analyst said. “The small size of the deal, and expectations of a future deal, may also require a further premium.”

China Travel on roadshow

China Travel Service (Holdings) Hong Kong Ltd. set out on Thursday for a roadshow to market a dollar-denominated issue of notes, a market source said.

HSBC and UBS are the joint global coordinators, and HSBC, UBS, CCB International and ABC International are the joint bookrunners and joint lead managers for the Regulation S deal.

The roadshow will take place in Hong Kong, Singapore and London.

China Travel is a Hong Kong-based owner of various travel-related businesses.

Roadshow for Indiabulls

India’s Indiabulls Financial Services Ltd. began a roadshow on Thursday to market a possible issue of notes, a market source said.

Investor meetings will be held in Singapore and Hong Kong.

No other details were immediately available on Thursday.

Indiabulls Financial Services is a retail financial services company based in New Delhi.

SK E&S seeks issuance

Korea’s SK E&S Co. Ltd. is looking to issue dollar-denominated perpetual notes with Barclays, Citigroup, Goldman Sachs, JPMorgan and UBS, a market source said.

No other details were immediately available on Thursday.

SK E&S is a natural gas and electricity company based in Seoul.

FlyDubai plans Islamic notes

Dubai Aviation Corp. (FlyDubai) is looking to issue Islamic bonds in late 2014 or early 2015, a market source said.

Credit Agricole CIB, Dubai Islamic Bank, Emirates NBD, HSBC, National Bank of Abu Dhabi, Noor Bank and Standard Chartered Bank are the bookrunners for the sukuk issue.

The issuer is a low-cost airline.

Yapi Kredi brings deal

Late on Wednesday, Turkey’s Yapi ve Kredi Bankasi AS priced $500 million 5 1/8% notes due Oct. 22, 2019 at 99.765 to yield 5.179%, or mid-swaps plus 370 bps, a market source said.

Commerzbank, JPMorgan, Societe Generale CIB, Standard Chartered Bank and UniCredit were the bookrunners for the Rule 144A and Regulation S deal.

Yapi Kredi is an Istanbul-based lender.

Korean Reinsurance sells notes

Korean Reinsurance Co. Ltd. sold $200 million 4½% notes due Oct. 21, 2044 at 99.558 to yield 4.6%, or Treasuries plus 314.70 bps, a market source said.

The notes were talked at a yield in the 4.65% area.

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

The issuer is based in Seoul, South Korea.

ENN releases final book

The new $400 million issue of 3¼% notes due in five years from China-based ENN Energy Holdings Ltd. drew a final book of $825 million, a market source said.

The notes priced at 99.502 to yield 3.359%, or Treasuries plus 210 bps.

UBS and HSBC were the joint global coordinators, joint bookrunners and joint lead managers.

The company plans to use the proceeds to fund part of the RMB 4 billion to be paid in connection with its acquisition of 1.12% of Sinopec Marketing Co., Ltd. and for general corporate purposes, including working capital.

About 55% of the orders came from Asia and 45% from Europe, with 78% from fund managers, 10% from insurers, 7% from banks and 5% from private banks.

ENN Energy is a Lanfang, China-based investment holding company that invests in, operates and manages gas pipeline infrastructure and sells and distributes gas.

Chinese deal oversubscribed

The final book for Power Construction Corp. of China’s new $500 million issue of 4.05% perpetual notes was more than $3.3 billion from more than 150 accounts, a market source said.

The notes priced on Wednesday at par to yield 4.05%, following talk at a yield in the 4.1% area.

HSBC, Standard Chartered Bank, Bank of Communications Hong Kong, Bank of China and CCB International were the bookrunners for the Regulation S deal.

About 87% of the orders came from Asia and 13% from Europe, with 50% from fund managers, 31% from insurers, 11% from banks, 8% from private banks.

The issuer is a Beijing-based contracting, investment and real estate development company.

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