Indonesia, Gildemeister, South Africa, Royal Capital price bonds amid thinner trading

By Christine Van Dusen

Atlanta, Jan. 9 - Indonesia, Chile's Automotores Gildemeister SA, South Africa and Philippines-based Royal Capital BV sold notes on an active Monday for new deals but a quieter one for the secondary market as investors remained mostly on the sidelines.

"It still appears a little thin out there, and we're still waiting for some new issues," a trader said. "I'm still happy selling into upticks. Rallies should bring issuance, and there remains enough noise out there for me to be happy keeping things close to home and having some powder dry."

Sentiment was buoyed somewhat by remarks from German chancellor Angela Merkel and French president Nicolas Sarkozy, who said they're closer to a pact that would require countries in the euro zone to follow tougher fiscal rules. But trading activity remained thin.

"It's the first full day back, and we are having another go at bidding up emerging Europe, Middle East and Asia bonds, but it's being met with the hangover from Friday's weak close," a London-based trader said. "Overall, this market is going nowhere rapidly, but within the general indifference there are pockets of activity."

The morning's biggest losers, he said, were Ukraine and Turkey, which were both 15 basis points to 20 bps wider.

"All of a sudden sentiment has become very bearish on [Turkey]," he said. "Turkish banks are solid as a rock, though, with Isbank now only 100 bps over."

Hungary bounced on Monday after a successful government bond auction and hopes that bailout talks are ahead.

"They're 20 bps firmer," he said. "And Russia is still very firm, with Gazprom still the preferred credit. All things Russia are solid as a rock, as it's the one major EM credit keeping out of the news right now."

Vimpelcom rallies

In the corporate space, Russia's Vimpelcom rallied 25 bps as they signed a non-binding memorandum of understanding with Algeria, a trader said.

"Nothing has been agreed, but at least they are talking," he said.

Meanwhile, Kazakhstan's BTA Bank still had not paid out its coupon.

"But the expectation that they will is keeping a bid to the bonds," he said.

Looking to the Middle East, Lebanon remained solid, a trader said. And Dubai Holding's 2012s move up to a 99 handle.

Indonesia, Gildemeister price

Indonesia priced a $1.75 billion issue of 5¼% notes due Jan. 17, 2042 at 98.148 to yield 5 3/8%, a market source said.

The notes priced in line with talk, which was set at 5 3/8%.

HSBC, JPMorgan and Standard Chartered were the bookrunners for the Rule 144A and Regulation S offering.

And Chile-based auto distributor Automotores Gildemeister priced a $100 million tap of its outstanding $300 million 8¼% notes due May 24, 2021 at 102.267 to yield 7.9%, a market source said.

JPMorgan was the bookrunner for the Rule 144A and Regulation S notes.

Proceeds will be used for debt refinancing.

South Africa sells notes

South Africa priced $1.5 billion 4.665% notes due January 2024 at par to yield 4.665%, or Treasuries plus 270 bps, a market source said.

Barclays Capital and Citigroup were the bookrunners for the Securities and Exchange Commission-registered deal, which priced in line with talk.

"South Africa kicks off the new issue market for 2012 and has to watch their secondary get whacked by 20 bps," a trader said prior to pricing. "But they've still tightened in the price talk by 5 bps to Treasuries plus 270 bps, so it can't be all bad."

Proceeds will be used to repay maturing debt and for general governmental purposes, according to a filing from the sovereign.

Royal Capital prints bonds

In its new deal, Philippines-based Royal Capital priced a $150 million tap of its 8 3/8% perpetual notes at 98.375, a market source said.

The original tranche totaled $200 million.

Citigroup and HSBC were the bookrunners for the Regulation S notes, which are non-callable for five years and include a change-of-control put at 101% with a step-up of 500 bps.

Proceeds will be used for the development of greenfield projects, potential acquisitions and general corporate purposes.

The notes are guaranteed by parent company International Container Terminal Services Inc., a Manila, Philippines-based port and terminal developer and manager.

Banco Continental plans notes

Also from Latin America, Peru-based lender BBVA Banco Continental SA was planning a $300 million issue of five-year senior notes, a market source said.

Goldman Sachs, BBVA Securities and JPMorgan are the bookrunners for the Rule 144A and Regulation S transaction.

Proceeds will be used for general corporate purposes.

Also from Latin America, the final book for Brazil-based lender Banco Bradesco SA's $750 million issue of 4½% notes due Jan. 12, 2017 was $2.2 billion, a market source said.

The notes came to the market at par to yield 4½%, or Treasuries plus 361.7 bps.

BB Securities, Bank of America Merrill Lynch, Bradesco, BTG Pactual, Citigroup and HSBC were the bookrunners for the Rule 144A and Regulation S transaction.

Latvia, Shui On ahead

Monday also saw the Republic of Latvia mandate Deutsche Bank, HSBC and JPMorgan for a global bond offering, a market source said.

No other details were immediately available on Monday.

And Shui On Development (Singapore) is planning an issue of notes via Standard Chartered, BNP Paribas, Deutsche Bank and UBS, according to a company filing.

Proceeds from the Regulation S deal will be used to fund capital expenditures and to acquire, develop, construct or improve assets.

Shui On Development is a subsidiary of Shanghai-based property developer Shui On Land Ltd.

Emirates Islamic Bank eyed

One trader was keeping his eye out for the upcoming issue of notes expected from Emirates Islamic Bank.

"It's an interesting one - an A-rated banking entity from Dubai issuing a new bond, and a sukuk to boot," he said. "These are few and far between."

The Dubai-based lender set price talk for its planned dollar-denominated issue of benchmark-sized notes at mid-swaps plus 350 bps, a market source said.

Citigroup, Emirates NBC Capital Ltd., HSBC, National Bank of Abu Dhabi, RBS and Standard Chartered Bank are the bookrunners for the deal.

"As with many Dubai entities, 2012 is a key year, and this bank looks no different, with large amounts of debt coming due in the second half of this year," he said. "So while a little wary of the credit, I think at this guidance it will have some support, and it is one of the top five banks in the UAE."

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