Argentina's YPF prints notes; Ivory Coast seeks to issue bonds; Halkbank CEO arrested

By Christine Van Dusen

Atlanta, Dec. 17 - Ivory Coast announced plans to issue notes and Argentina's Yacimientos Petroliferos Fiscales (YPF) priced bonds on a Tuesday that saw emerging markets spreads tighten.

The Markit iTraxx SovX CEEME ex-EU index spread opened at 314 basis points over Treasuries, narrower than Monday's 318.2 bps spread. The corporate index - seen Monday at 250 bps over Treasuries - narrowed 2 bps to a 248 bps spread on Tuesday.

In its new deal, Argentina-based petroleum and natural gas company YPF priced an upsized $500 million issue of 8 7/8% notes due in 2018 at 99.505 to yield 9%, a market source said.

The pricing matched talk, set at 9%.

The issuer was initially expected to bring to market a $300 million issue of notes with bookrunners Itau Unibanco and Morgan Stanley but upsized due to demand, the source said.

In other deal-related news, Ivory Coast expects to issue $1 billion of eurobonds in 2014.

In the secondary market, Turkey's Turkiye Halk Bankasi (Halkbank) saw its bonds move down on the news that the state-owned lender's chief executive officer was detained on accusations of corruption and bribery related to construction projects, a London-based analyst said.

And bonds from Ukraine were mostly unchanged on Tuesday. This followed Monday's significant rally and short covering on the news that there could be a discount in the price of gas for the sovereign, said Svitlana Rusakova of Dragon Capital.

"The sovereign was up by 1½ points while quasi-sovereigns continued to power ahead, gaining as much as 3 points in some cases," she said. "The market will probably pause now, waiting for the outcome of today's Ukrainian-Russian talks in Moscow."

Halkbank in focus

Along with the CEO of Turkey's Halkbank, the economy minister's son and the interior minister's son were arrested as part of the corruption investigation, the analyst said.

"This is definitely a surprise to the market, and the lack of detail is certainly not soothing," she said. "Considering the increased tensions on the political scene, with more cases on corruption and finger-pointing, we are entering into a volatile pre-election period."

The controversy surrounds just the individuals arrested, not the bank itself, and construction lending accounts for less than 3% of Halkbank's total book, she said.

"At this stage, we view this as negative for sentiment," she said. "However, this is a state-owned bank, strategically important and with strong fundamentals and we would require more detail before taking a different stance on the bank."

Halkbank is also looking to sell its pension fund and life insurance, which could boost the credit, she said.

"Bonds have adjusted down defensively two points, with bids slowly coming back here," she said at midday in Europe.

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