CNOOC, Nigeria, Daycoval keep issuance streak alive; recent issues stumble; sukuks popular

By Christine Van Dusen

Atlanta, Jan. 21 - Hong Kong's CNOOC Finance Ltd., Nigeria and Brazil's Banco Daycoval and Grupo Virgolino de Oliveira SA brought new deals to market on Friday as volumes crept up and emerging markets bonds remained weighed down by the recent spate of supply.

"Some people are pulling back a little bit," a London-based market source said. "Some new issues have priced too tight. But I wouldn't call volumes 'bad.'"

Recent issues continued to struggle to stand out among all the recent new deals, particularly the $6 billion of notes that priced from Brazil's Petrobras on Thursday.

"There have just been so many new issues," a London-based market source said.

And there promise to be many more, given Friday's news of deals in the works from such issuers as Mexico's Empresas ICA SAB de CV, Brazil's Braskem SA and Ukraine's Ukreximbank and Metinvest BV.

CNOOC prints notes

Hong Kong-based oil and natural gas exploration and production company CNOOC Finance Ltd. priced a two-tranche offering of notes totaling $1.5 billion, a market source said.

The deal included $1 billion 4¼% notes due Jan. 26, 2021, which priced at 98.59 to yield 4.426%, or Treasuries plus 100 basis points.

The notes were talked at a spread of Treasuries plus 100 bps to 110 bps.

The second tranche totaled $500 million 5¾% notes due Jan. 26, 2041 and came to market at 99.448 to yield 5.789%, or Treasuries plus 120 bps.

The notes were talked at a spread of Treasuries plus 125 bps to 135 bps.

Proceeds will be used for general corporate purposes.

And Brazil-based sugar and ethanol company Grupo Virgolino de Oliveira priced $300 million notes due Jan. 28, 2018 at par to yield 10½%, a market source said.

BTIG, Credit Suisse, Itau and Santander were the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for four years.

Nigeria, Daycoval do deals

Also pricing on Friday was the Federal Republic of Nigeria's $500 million 6¾% notes due Jan. 28, 2021, which came to market at 98.223 to yield 7%, or Treasuries plus 356.6 bps, a market source said.

Citigroup and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal, which was talked at a yield in the 7% area.

Prior to pricing, the issue was trading in the gray market at right around par, a source said.

Also on Friday, Brazil-based lender Banco Daycoval priced $300 million 6¼% notes due Jan. 28, 2016 at 99.472 to yield 6 3/8%, or Treasuries plus 433.7 bps, a market source said.

Goldman Sachs, Standard Chartered and HSBC were the bookrunners for the Rule 144A and Regulation S deal, which was talked at a yield in the 6½% area.

Emgesa, TMK sell notes

This followed Thursday's pricing by Colombia's Emgesa SA ESP of COP 740 billion notes due Jan. 25, 2021 at par to yield 8¾%, a market source said.

Citigroup and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S notes, which are payable in dollars.

Proceeds will be used for general corporate purposes, to finance new projects and to repay existing debt.

Emgesa is an electricity supplier based in Bogota, Colombia.

Also pricing Thursday was Russia-based welded pipe producer, supplier and distributor OAO TMK, with $500 million notes due Jan. 27, 2018 (B1/B/) at par to yield 7¾%, or Treasuries plus 494 bps, a market source said.

Barclays Capital, Deutsche Bank and UBS were the bookrunners for the Regulation S deal, which was talked at a yield in the 7½% area.

The final book was about $600 million with 69 accounts involved, with almost all sold to Europe, with small participation from Asia. Funds accounted for 54% while banks were 24% and private banks were 22%.

Recent issues mixed

The day was mixed for recent new issues. Brazil-based Petrobras performed well, with its five-year notes - that priced Thursday at 99.663 to yield 3.95% - seen trading at 174 bps bid, 170 bps offered. The one-year tranche of notes that priced at 99.801 to yield 5.401% were trading at 180 bps bid, 176 bps offered. And the 30-year notes that priced at 99.288 to yield 6.806% traded Friday at 199 bps, 195 bps offered.

The 7¼% notes due 2021 from Kzakhstan's JSC Halyk Bank that priced Wednesday at 98.263 to yield 7½% did not fare quiet as well. They were seen trading at 98.166 bid, 98.146 offered early Friday.

And 9½% perpetual notes from Brazil's Energisa SA, which came to market this week at par, was trading at 98.5 bid, 99 offered on Friday.

"That did not do well, not at all," a London-based market source said. "I think that it's a market where the appetite for Brazilian perps is very difficult to predict. The Brazilian money doesn't buy it, and that's the biggest problem."

And Petrobras' big boost in supply shouldn't be blamed, he said.

"They're so different that it shouldn't matter much," he said. "The problem with Brazilian perps is that there have been a lot that have come to market and more are anticipated."

Plus, he said, this issue allows Energisa to defer interest payments on the notes at any time, subject to a dividend stopper. Deferred interest amounts will accumulate and will bear interest of 1% higher than the rate of the notes.

"So there's nothing really attractive about it," he said.

Ukraine corporates plan deals

Ukraine's state-run import-export bank, Ukreximbank, mandated Credit Suisse, Citigroup and Deutsche Bank for a possible issue of Ukrainian Hryvnia-denominated notes, a market source said.

A roadshow will begin Tuesday in Europe.

Also from the Ukraine, Donetsk-based integrated mining and steel company Metinvest selected Credit Suisse, Deutsche Bank, ING, RBS and VTB Capital as joint bookrunners for a dollar-denominated issue of notes, a market source said.

A roadshow for the Rule 144A and Regulation S deal will begin Tuesday and travel through Europe, Asia and the United States.

Empresas, Braskem pick bookrunners

Also picking bookrunners was Mexico-based construction company Empresas ICA, which tapped Bank of America Merrill Lynch, Morgan Stanley and Santander for an issue of perpetual notes, a market source said.

A roadshow will begin Monday in Singapore and travel to New York, Hong Kong, Boston, Geneva, Zurich and London before wrapping up on Jan. 27.

And Brazil-based petrochemical company Braskem mandated Credit Agricole CIB, Deutsche Bank and Espirito Santo Investment Bank for a roadshow starting Wednesday, a market source said.

An issue of notes may follow if market conditions are favorable.

Friday also saw Hong Kong-based seafood company Pacific Andes Resources Development Ltd. set price talk for its three-year issue of 1 billion renminbi notes at 5½% to 5¾%, a market source said.

Bank of America Merrill Lynch, HSBC and Standard Chartered are the bookrunners for the Regulation S deal, which includes a change-of-control put at 101%.

Belarus oversubscribed

In other news Friday, the final book for Belarus' $800 million notes due 2018 - which priced this week at par to yield 8.95% - was $2.75 billion from 300 orders, a market source said.

About 33% came from the United Kingdom, 22% from offshore United States, 13% from Russia, 10% from Germany and Austria, 9% from Switzerland, 3% from Asia and 13% from other locations.

Funds accounted for 36%, banks 35%, hedge funds 18% and others 11%.

Sukuks stay popular

Sukuks remained in demand on Friday, with Abu Dhabi Islamic Bank's 3.745% 2015 notes - which came to market at par - performing particularly well.

"It's very impressive and holding very well in this market, which broadly remains heavy," a London-based trader said.

Abu Dhabi-based Aldar Properties, meanwhile, was off about 1.5 points from the high print of 112.50.

At the same time, Egypt's 5¾% 2020 notes - which were trading at 103 bid, 103.74 offered on Thursday - closed Friday at 100 bid, 100.50 offered.

"It's been fairly stable in Egypt the past few sessions as attention in the region turns to Lebanon's assets," the trader said. "It definitely feels like some money has been put to work in Bahrain credits over the past week as there are still a few street shorts out there."

Another Middle Eastern credit, Abu Dhabi National Energy Co., saw its 5.62% 2012s trading Friday at 104.75 bid, 105.25 offered versus Thursday's 104.87 bid, 105.120 offered. The corporate's 7¼% 2018s - which ended Thursday at 112.25 bid, 112.50 offered - finished Friday at 112.12 bid, 112.62 offered.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.