Poland, BR Malls, EDC, First Gulf Bank sell notes; risk aversion recedes; LatAm deals eyed

By Christine Van Dusen

Atlanta, Jan. 13 - Abu Dhabi's First Gulf Bank, Poland, the Philippines' Energy Development Corp. and Brazil's BR Malls Participacoes SA were among the emerging markets issuers to price notes on a firmer Thursday that saw particularly solid support for Middle Eastern names in the secondary market.

"The market is firm," a London-based source said. "There's plenty of liquidity around, lots of prices and good activity."

Risk aversion seems to be receding, said Gavan Nolan, an analyst with Markit, in a report.

"Dealers took the opportunity to trim their short positions even further," he said. "The rally was largely confined to sovereigns and financials, with the main corporate indices little changed on the day."

Giving a small boost to sovereign spreads was the news that the European Union will no longer take a piecemeal approach to the euro zone crisis and will increase the scope and size of the European Financial Stability Facility, he said.

"Banks continued to recover from the record wide levels reached on Monday. High-beta names have led the way, both in senior and sub debt," Nolan said. "It is expected that more banks across Europe will try and raise capital before the upcoming stress tests."

Abu Dhabi in focus

First Gulf Bank's CHF 200 million 3% notes due Feb. 16, 2016 came to market Thursday at 99.77 to yield 3.05%, or mid-swaps plus 164 basis points, a market source said.

Deutsche Bank was the bookrunner for the deal, which was talked at mid-swaps plus 164 bps.

This came amid news that the Abu Dhabi sovereign is providing a $5.2 billion bailout for developer Aldar Properties, and the company is planning a shareholders' meeting to seek approval for a $760 million convertible bond issue.

"The company will sell assets to the government and convertible bonds to [state-owned fund] Mubadala," a London-based trader said. "The nearly $3 billion worth of assets are valuable to the economy."

In response, Aldar's 2014 bonds closed up 2 points after trading at 11.375, tighter by 85 bps for the week and 125 bps for the month.

Poland, BR Malls price notes

Also on Thursday, Poland's €1 billion add-on to its 4% notes due March 23, 2021 priced at 93.281 to yield 4.853%, or mid-swaps plus 150 bps, a market source said.

Deutsche Bank, ING, SG CIG and Unicredit were the bookrunners for the deal.

The original €1 billion issue priced in September at 99.884 to yield 4.016%, or mid-swaps plus 120 bps.

And Brazil's BR Malls priced $230 million perpetual notes on Thursday at par to yield 8½%, a market source said.

BTG Pactual and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for general corporate purposes and to fund capital expenditures and refinance existing debt.

EDC prints notes

Also on Thursday, Philippines-based EDC priced $300 million notes due Jan. 20, 2021 at par to yield 6½%, a market source said.

Deutsche Bank and JPMorgan were the bookrunners for the Regulation S-only deal.

Proceeds will be used for general corporate purposes, for funding growth opportunities and for capital expenditures and debt servicing requirements.

Thursday also saw Banco do Brasil launch €750 million notes due 2016 at mid-swaps plus 200 bps, a market source said.

Banco Votorantim, BB Securities, BNP and Deutsche Bank are the bookrunners for the deal.

Hong Kong Electric in demand

This followed Wednesday's pricing of Hong Kong Electric Holdings Ltd.'s $250 million add-on to its existing $500 million 4¼% bonds due Dec. 14, 2020 at 96.289 to yield 4.723%, a market source said.

HSBC, RBS and Standard Chartered were the bookrunners for the Regulation S deal.

The notes were 3.75 times oversubscribed with more than 80 accounts involved, the source said. About 85% came from Asia and 15% from Europe. Funds accounted for 42% while insurers were 26%, banks 23% and private banks 9%.

The original issue priced in early December at 99.268 to yield 4.341%, or Treasuries plus 137.5 bps.

Sukuks solid

In the secondary market on Thursday, sukuks were seeing solid support, the London trader said.

"There remain very good technicals with limited dealer inventory, strong inflows into sukuk funds and, so far, limited supply," he said.

"We traded a good portion of our axes on Qatari Diar's 2020s and saw buyers of Qatar's 2020s, which are tighter by 13 bps on the month now," he said. "And the front end, as usual, is a rock."

All told, most names in the Middle East - excepting Abu Dhabi-based Waha Capital PJSC's 2020s and Abu Dhabi's 2019s - were well bid on Thursday.

"It feels like there's some paper around in the street on Waha," the trader said.

Troubles for Tunisia

He also traded some "decent size" on Abu Dhabi National Energy Co. PJSC's 2012s, which closed at 105 bid, 105.15 offered. And Lebanon was quiet and fairly stable.

"Some bigger banks are looking to pick up paper, and this is supporting the market in the short term," he said.

Meanwhile, the Ivory Coast continued to struggle with civil unrest and saw its 2040 bonds "heavy" at 38.50 bid, 39.50 offered, the trader said.

"Tunisia remains heavy as the situation on the ground doesn't seem to be improving. Five-year credit default swaps are at 155 bps bid, 170 bps offered," he said.

"Egypt's 2020s are another 10 bps wider."

LatAm issuers plan deals

Also on Thursday, Colombia-based public services company Empresas Publicas de Medellin ESP mandated Bank of America Merrill Lynch and Barclays for a roadshow starting Monday, a market source said.

The marketing trip will begin in London and travel to New York and Boston before finishing up in Los Angeles on Jan. 20.

And Chile-based forest products company Inversiones CMPC SA is moving ahead with a planned $500 million issue of seven-year senior notes, a market source said.

Citigroup, Itau and JPMorgan are the bookrunners for the Rule 144A and Regulation S offering. Proceeds will be used for general corporate purposes.

The company first marketed the deal in November with a roadshow in Hong Kong, Los Angeles, Boston and New York.

Also from Latin America, Brazil-based sugar and ethanol company Grupo Virgolino de Oliveira SA has mandated BTIG, Credit Suisse, Itau and Santander for its planned offering of dollar notes due 2018, a market source said.

A roadshow will start Friday and travel from Geneva to Zurich, London, New York and Boston before finishing up on Jan. 20.

The Rule 144A and Regulation S notes are non-callable for four years.

© 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.