EM primary market perks up, secondary stays slow; new deals from SK Telecom, Vakifbank

By Christine Van Dusen

Atlanta, Oct. 24 - South Korea's SK Telecom Co. Ltd., Turkey's Turkiye Vakiflar Bankasi TAO (Vakifbank), Bahrain's Investcorp SA and Malaysia's Nam Cheong Ltd. sold notes on Wednesday as investors speculated that Europe's dreary economic data could inspire further easing of monetary policy.

This led to a slight boost in sentiment, though trading activity remained somewhat lackluster.

"We do not expect a significant extension of the past few days' weakness, particularly in fixed income," Barclays said in a report. "EM bond returns should easily beat the low bar set by Bunds and Treasuries.

"Investor flows into bonds have repeatedly been stress-tested this year and, if anything EM tail risks have eased."

Wednesday also saw Russia's Brunswick Rail Finance Ltd., South Africa's Sasol Financing International plc, Brazil's Sifco SA and Brazil's Usina Sao Joao Acucar e Alcool SA (USJ) advancing new deals.

In trading on Wednesday, notes from Ukraine continued to decline, said Svitlana Rusakova of Dragon Capital.

The sovereign's 2017 dropped to 108 bid, 109 offered, while the 2020s dipped to 103.25 bid, 104.25 offered. The 2021s lost ground at 104.50 bid, 105.50 offered.

"Corporates followed the move in sovereigns," she said.

In its new deal, mobile phone operator SK Telecom sold $700 million 2 1/8% notes due May 1, 2018 at 99.423 to yield 2.237%, or Treasuries plus 147.5 basis points, a market source said.

The notes priced in line with talk, set at the Treasuries plus 150 bps area, plus or minus 2½ bps.

Merrill Lynch, Barclays, Credit Suisse, Deutsche Bank, HSBC and UBS were the bookrunners for the Rule 144A and Regulation S deal.

Vakifbank, Investcorp do deals

In another new deal, Vakifbank priced a $500 million issue of 6% notes due Nov. 1, 2022 at par to yield 6%, or Treasuries plus 422.2 bps.

The notes were talked at a yield in the 6 1/8% area.

Barclays, Goldman Sachs, ING and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

And Investcorp priced a $250 million issue of 8¼% notes due Nov. 1, 2017 at par to yield 8¼%, in line with talk.

Bank of America Merrill Lynch, Citigroup, Credit Suisse, ING, JPMorgan and RBS were the bookrunners for the Rule 144A and Regulation S deal.

Nam Cheong, Brunswick deals

Nam Cheong, an investment holding company that focuses on shipbuilding and ship chartering, priced a S$110 million issue of 6% notes due November 2015 at par to yield 6%, a market source said.

DBS was the bookrunner for the Regulation S deal.

Also on Wednesday, railcar operating lessor Brunswick Rail set initial price talk at the high-6% area for its planned issue of $500 million five-year notes.

Goldman Sachs, Raiffeisen Bank, UBS and VTB Capital are the bookrunners for the Rule 144A and Regulation S deal, which is expected to price this week.

Sasol taps bookrunners

Sasol Financing International has mandated Barclays, HSBC and JPMorgan for an issue of notes that will be marketed during a roadshow, a market source said.

The marketing trip will begin Thursday in London and travel to Los Angeles and New York before concluding on Oct. 30 in Boston.

Proceeds from the Securities and Exchange Commission-registered notes will be used for general corporate purposes, including capital expenditures and the development of the company's pipeline.

The notes are guaranteed by Sasol Ltd., a Johannesburg-based mining, energy and chemical company.

Brazil issuers plan roadshows

Two issuers from Brazil selected bookrunners for upcoming roadshows.

Sifco mandated Citigroup, Goldman Sachs and Banco Pine to arrange a roadshow for an offering of notes.

The marketing trip for the Rule 144A and Regulation S deal will run from Oct. 31 to Nov. 2.

Based in Sao Paulo, Sifco is a manufacturer of forged components for several segments of the foreign and domestic automotive industry.

And sugar and ethanol producer USJ has tapped Credit Suisse, HSBC and Itau BBA to market an issue of dollar notes.

The roadshow for the Rule 144A and Regulation S transaction will be held in Latin America, the United States and Europe.

Odebrecht deal oversubscribed

In other news from Brazil, Odebrecht Finance Ltd.'s recent $450 million add-on to its 7 1/8% notes due June 26, 2042 drew $2.15 billion in orders, a market source said.

The notes priced Tuesday at 116.266 to yield 5.95%, or Treasuries plus 299.5 bps, with BB Securities, BNP Paribas, Banco Bradesco and Citigroup in a Rule 144A and Regulation S transaction.

About 70% of the orders came from the United States, 11% from Europe, 9% from South America and 10% from others.

Funds accounted for 55%, insurers 15%, hedge funds 13%, banks 8% and others 9%.

The original $400 million issue priced in June at 98.479 to yield 7¼%.

The notes are guaranteed by Construtora Norberto Odebrecht SA, an engineering, construction, chemical and petrochemical conglomerate based in Salvador da Bahia, Brazil.

Demand seen for Bolivia notes

Also oversubscribed was Bolivia's recent $500 million issue of 4 7/8% notes due Oct. 29, 2022 that priced at par.

Bank of America Merrill Lynch and Goldman Sachs were the bookrunners for the Rule 144A and Regulation S deal, the sovereign's first in more than 90 years.

The final book was about $4.5 billion.

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