Corporacion Lindley sells bonds to end topsy-turvy week for EM assets; Sukuks struggle

By Christine Van Dusen

Atlanta, Nov. 18 - Peru's Corporacion Lindley SA priced notes on Friday as emerging markets assets finished an up-and-down week on a decidedly weak note amid continued concern about the European economic crisis and ahead of the Thanksgiving holiday in the United States.

"Despite the best efforts of retail investors and the marginal real-money accounts to bid the market up today, we are going out with a distinctively weak tone, even as European periphery spreads have a good day, tightening by 20 bps," a trader said. "So a quiet end to a fairly eventful week."

Still, some emerging markets bonds experienced fairly solid demand on Friday.

"It's good to be back in front of the screens where emerging Europe, Middle East and Asia assets are getting a reasonable bid, despite the sea of doom and gloom the euro zone is managing to provide," a London-based trader said.

Said another trader, "The broader markets are having a slightly better day today on some position squaring. Thanksgiving is next week, so for all intents and purposes it should be fairly active on Monday through Wednesday and then will slowly wilt into the weekend."

In the day's new deal, the Peru-based bottler and distributor of Coca-Cola Co. beverages, Corporacion Lindley, priced a $320 million issue of notes due 2021 at par to yield 6¾%, a market source said.

The notes - which include a make-whole call at 50 basis points - were talked at the 7% area.

Citigroup and JPMorgan were the bookrunners for the Rule 144A and Regulation S transaction.

Turkey bonds firm

In trading on Friday, Turkey's benchmark and corporate bonds were slightly firmer at the open.

"Turkish banks have finally seen some selling after a month of outperformance," a trader said. "But activity is relatively lower."

Looking to Russia, the recent notes from OJSC Gazprom were proving to be a favorite among retail investors.

The deal, which came to the market on Nov. 16, included $1 billion 4.95% notes due 2016 that priced at par to yield mid-swaps plus 375 bps. The second tranche, $600 million 5.999% notes due 2021, priced at par to yield mid-swaps plus 390 bps.

"Retail investors are all over the new Gazprom 2016s, which makes sense given its pick-up to Tuesday levels on the 2015s," the London trader said. "The 2021s, at near-flat to the Lukoil curve, should perform in time."

Overall, Russian corporate bonds were seen firming up on Friday, another trader said.

Ukraine performs

The Ukraine sovereign was performing well on the back of a new gas deal with Russia, the London trader said.

"But it's time for the corporates to underperform as the cyclical names get punished," he said.

The day's main laggard was the metals and mining sector, with Ukraine-based Metalloinvest 130 bps wider on the week and Russia's Severstal and Evraz Group 50 bps to 60 bps wider, a trader said.

From Kazakhstan, KazMunaiGaz was looking expensive, he said.

"The new Gazprom deal puts KMG's 2021s over 30 bps rich," he said.

Africa in focus

From Africa, Egypt was trading heavy while Morocco, Gabon and Namibia saw decent interest as the day went on, a trader said.

Egypt's 2020s were seen at 97 bid, 98 offered while its 2040s traded at 92.5 bid, 94.5 offered.

Morocco's 2017s were trading at 104.12 bid, 105.12 offered while its 2020s were seen at 90.37 bid, 91.37 offered.

Gabon's 2017s were seen at 115.62 bid, 117.62 offered. And Namibia's 2021s were trading at 101 bid, 102 offered.

ADCB oversubscribed

The final book for Abu Dhabi-based ADCB Islamic Finance (Cayman) Ltd.'s $500 million 4.071% notes due 2016 was $1.4 billion with more than 100 accounts involved, a market source said.

The notes priced Nov. 16 at par to yield 4.071%, or mid-swaps plus 275 bps, via Abu Dhabi Commercial Bank, Bank of America Merrill Lynch, JPMorgan and Standard Chartered Bank in a Regulation S transaction.

About 52% of the orders came from the Middle East and North Africa, 25% from Europe and 23% from Asia. Banks accounted for 59%, fund managers 35% and insurance 6%.

ADCB, Bahrain trade higher

The new ADCB notes opened Friday at 100.13 bid, 100.33 offered and later traded at 100.20 bid, 100.30 offered.

Meanwhile, the new issue of notes from Bahrain - a $750 million issue of 6.273% notes due 2018 that priced at par on Nov. 16 - were about 10 bps to 12 bps tighter on Friday.

"The new issues this week are performing well," the London trader said.

Said another trader, "Both deals are doing what new issues should do - gradually trading higher with good two-way interest."

IPIC's 2017s tighten

The recent notes from Abu Dhabi-based International Petroleum Investment Co. remained in focus on Friday.

The 2017s closed the week on an impressive note, a trader said, about 3 bps tighter on the week in terms of spread.

"The 2020s, 2021s and 2022s are feeling leaned on, despite some decent interest on the 2020s, which felt like they made it onto a private banking buy list in Asia," a trader said. "The 2016s traded well all week and close out about 20 bps better. With the 2015s there are bonds floating around at a good value."

Sukuks suffer

In other trading from the Middle East, Kuwait-based Kipco's 2016s were 60 bps tighter over the month.

"It felt like some Kipco paper came out today," a trader said. "They have been hard to source of late and were being squeezed back up. The bond had a good run, though."

Overall, sukuk issues had a tough week, he said.

"It's feast or famine with them," he said. "Two months ago they were super well bid and impossible to find. At the moment, they're very well offered. Thin and flaky markets will do this to a bond, any bond. Still, I've a view to the medium-term and think some of the blue-chip names might be worth dipping the toe if they come off any further."

Middle Eastern bonds solid

Bonds from Dubai rebounded somewhat on Friday, with Dubai Water and Electricity Authority's 2016s trading tight versus the 2015s and 2020s.

"It feels like this will remain the case going forward," a trader said.

Emirates' 2016s are closing the month about 5 bps tighter.

"That's a super effort and continues to show the power of retail investors, who adore that bond," he said.

And Lebanon stayed strong. "That's a rock," he said.

© 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.