Israel Electric, Icici Bank price bonds; sentiment improves, but investors still skittish

By Christine Van Dusen

Atlanta, June 18 - Israel Electric Corp. and India's Icici Bank Ltd. priced notes on a Tuesday that opened weaker for many emerging markets names but ended on a better note as investors showed some optimism about the fate of the United States Federal Reserve's bond-buying program.

Still, "skittishness" remained, a New York-based trader said.

"The overall skittishness in the market continues, keeping dealers on their heels and clients mainly on the sideline, at least until after tomorrow afternoon, at which time we will begin even more taper and U.S. rate conjecture," he said. "This could go on for quite awhile."

The Markit iTraxx SovX CEEME ex-EU index spread on Tuesday widened 7 basis points to 216 bps over Treasuries, while the Markit iTraxx Crossover index spread - seen Monday at 444.5 bps spread - tightened to 442 bps over Treasuries.

While waiting for Fed Chairman Ben Bernanke's remarks on quantitative easing and whether it will soon taper off, investors also kept an eye on Turkey. Instability remains, but the strength of the protests seems to be fading, a London-based analyst said.

"Minor skirmishes took place last night, but overall it wasn't as bad as the situation over the weekend," she said. "The Turkish sovereign is opening weaker on low volumes, with cash bonds 5 bps to 8 bps wider and credit default swap spreads 8 bps wider."

Better sellers were seen for both Turkish and Russian corporates, she said.

"We expect the focus to move away from Turkey - where, despite ongoing protests, tension appears to be fading - and towards Bernanke's crucial comment tomorrow," she said. "The market feels quiet as we await Bernanke's comments."

Lat-Am tightens

Latin American assets had a rollercoaster of a trading day, the New York-based trader said.

"We opened weaker on most credits and it quickly looked like we were in for a hard leg down, especially when a squeezed bond like Vale SA's 2022s widen 10 bps right off the bat," a New York-based trader said. "Most other credits felt weak, and screen bids began to get tagged heartily, with the very little liquidity that was available quickly drying up."

But sentiment improved as investors looked ahead to the Fed's comments, set for Wednesday.

"Treasuries rallied and our markets came ripping back tighter, with offers lifted at the lower levels," he said.

Many names that had been quiet in recent days saw good two-way activity, including Banco Santander Brasil. And paper from Odebrecht SA put in a solid day.

"The Street looks to continue to sit quite long throughout the curve, as this credit appeared on many of the larger dealers' recommended lists prior to our late May swoon," he said.

CEE bonds in focus

Bonds from Central and emerging Europe remained mostly quiet on Tuesday, according to a report from Erste Group Research.

"So all eyes will be on the Fed meeting tomorrow and Ben Bernanke's accompanying press statements," the report said. "It looks as if we will just have to get accustomed to bouts of risk-on and-off, depending on how US economic data develops."

Ukraine bonds tick down

Bonds from Ukraine have moved a touch lower so far this week, said Svitlana Rusakova of Dragon Capital.

"A very benign start to the week, with the market quiet and bid and ask spreads wider than usual, thus not much volume traded," she said.

Corporate bonds have been "broadly unchanged," she said. "We saw a few buying inquiries."

Israel Electric prints notes

In its new deal, Israel Electric priced a two-tranche issue of $1.1 billion notes due 2018 and 2023 via Barclays and Citigroup, a market source said.

The Rule 144A and Regulation S deal included $600 million 5 5/8% notes due 2018 that priced at par to yield 5 5/8%. The notes were talked at a yield of 5 5/8%.

The second tranche, $500 million 6 7/8% notes due 2023, priced at par to yield 6 7/8%. Price talk was set at 6 7/8%.

Icici Bank does deal

India-based Icici Bank priced RMB 650 million 4% notes due 2015 at par to yield 4%, a market source said.

Standard Chartered Bank and HSBC were the bookrunners for the deal.

© 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.