Longfor Properties prints notes as market awaits jobs data; Votorantim Cimentos sets talk

By Christine Van Dusen

Atlanta, March 31 - China-based Longfor Properties Co. Ltd. was alone in pricing a new issue on Thursday as risk appetite among emerging markets investors remained so-so in advance of Friday's release of payroll numbers in the United States.

"The positive trend in risk markets continues but has faded," according to a report from RBC Capital Markets.

"Spreads are generally a little wider, but nothing significant," a London-based market source said.

By afternoon most EM spreads were flat to 3 basis points tighter, a Toronto-based market source said.

"I think people are trying to go into Friday's payroll numbers flat," he said.

The one standout in the secondary market was Ivory Coast, which saw its bonds climb to their highest level since December on news that the political picture could be improving.

Longfor sells bonds

Beijing-based property developer Longfor Properties' $750 million notes due April 7, 2016 priced Thursday at par to yield 9½% via Citigroup, HSBC, Morgan Stanley and Standard Chartered in a Rule 144A and Regulation S transaction.

The notes priced at the tight end of talk, which was set at the 9½% to 9 5/8% area.

Proceeds will be used to finance property projects and for general corporate purposes.

In other deal-related news, Brazil-based cement manufacturer Votorantim Cimentos SA set price talk for its planned benchmark-sized issue of dollar-denominated notes due 2041 in the 7½% area, a market source said.

Merrill Lynch, Itau and JPMorgan are the bookrunners for the Rule 144A and Regulation S notes, which include a change-of-control put at 101% with a ratings downgrade.

Ivory Coast rallies

Meanwhile, trading volumes remained light and inquiries were low, a market source said.

The source did, however, note the massive rally for Ivory Coast as rebel forces moved into the country's commercial center and Laurent Gbagbo's army chief of staff departed his post.

"There's a sense the troubles there could be over soon," he said.

In response, the sovereign's 2032 dollar bonds were seen at 46 bid, up almost 8 points in a week. The notes closed Thursday at 46.50 bid, 47.25 offered.

"And Ghana's '17s are trying to play catch-up to Gabon," he said. "We're also seeing demand on Tunisia and Morocco paper."

Poland weaker, Hungary firmer

The London-based market source also saw some weakness for Poland on the back of rumors that the sovereign could soon issue notes.

"The long end was down about a half-point today," he said. "At the same time, there was some strength in Hungary. Hungary was firmer, up a half-point."

In the Middle East, "regional spreads are closing out the month on a firm footing," a market source said.

The recent bonds from International Petroleum Investment Co., for one, were fairly liquid with spreads unchanged, the London-based market source said.

Dubai, meanwhile, was a little softer. "Some chips are being taken off the table after a very solid fortnight," he said.

Said a trader: "Despite the rally, there still appear to be pockets of value in Dubai paper, though one has to be wary of the upcoming loan and bank refinance. I'd be waiting to reload longs on Dubai, given the move we have had."

Middle East trading mixed

Elsewhere in the region, Qtel International got steeper, the London-based market source said.

The company's 2021s and 2025s were not really budging, "but the 2014s and 2016s are feeling well bid," he said. "We're also seeing a little bit of nibbling on property bonds - Emaar Properties, Aldar Properties - and also seeing good Street bids on Abu Dhabi National Energy Co."

Overall, Abu Dhabi's corporates, sovereign and quasi-sovereigns were a touch wider on Thursday while the National Bank of Abu Dhabi's 2015 dollar notes were seen trading at 101.70 bid, 101.95 offered.

"That's unchanged, spread-wise, on the month," the London trader said. "It looks like a decent value."

And Saudi Arabia's five-year credit default swaps spread was seen at 117 bps bid, 123 bps offered on Thursday. "Most paper feels pretty well supported," he said.

Turkish economy grows

Looking at Turkey, the sovereign opened flat on Thursday ahead of news releases about the sovereign's trade balance and gross domestic product growth.

By the European afternoon, news spread that Turkey's economy grew 9.2% in the fourth quarter.

"Turkey has become the third-fastest growing G20 country after China and Argentina," a London-based trader said. "However, a rise in both the energy bill and non-energy imports widened the trade deficit to $7.4 billion, preventing us from fully enjoying the growth numbers. Hence, we saw moderate gains and activity on the sovereign today, which tightened 5 bps on the long end."

Also from Turkey, lender Isbank saw its chief executive officer resign on Thursday.

"But as this was expected, we didn't see any impact on Isbank's eurobonds," he said. "However Akbank was trading a tad higher today as its chairwoman talked confidently in an interview about the Turkish banking sector and its future prospects."

Buenos Aires in focus

The Province of Buenos Aires is expected to issue as much as $1.2 billion in the global markets by the end of this year, according to a report from Barclays Capital.

This would be in addition to the $750 million issued in January.

"We prefer the 2015s, given that they have come off most from their peaks earlier this year and should also benefit most from a focus on the shorter end of the Argentine sovereign curve because of expected normalization of the curve," the report said.

"For the next global issue, we think the level of yields will be more important than spreads for the provincial administration," Barclays said. "However the province seems to put a lot of value on the extension of the maturity profile.

"Thus, although we do not rule out a reopening of the 15s, we think the province will try, as much as the market allows, to stretch out to longer maturities."

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