Active market but thin volumes for EM debt; sukuks stand out; PLN, Namibia on roadshows

By Christine Van Dusen

Atlanta, Sept. 28 - Emerging markets assets had an active day on Wednesday, with two-way interest on many names in the secondary market, though volumes remained thin and the primary market was largely quiet.

"A market filled with tremendous uncertainty, hugely differing views and sukuks and locals generally on the bid is a good one to trade," a trader said. "Frustrating and thin, yes, but entertaining, nonetheless."

Sukuks were standouts, in particular those issues from First Gulf Bank, Abu Dhabi Islamic Bank, HSBC Bank Middle East and Sharjah Islamic Bank.

"They were all in demand," he said. "We traded all of these bonds at some stage today and go home a better seller, in small size, of First Gulf Bank."

In other trading, Kuwait's Kipco saw its 2016s close at 103 to 104, about 120 bps wider on the month. And Dubai's 2014s traded at 102.5 bid, 102.75 offered with very good volume.

"Elsewhere, Mubadala's 2021s look OK here. Month-on-month versus International Petroleum Investment Co. it has lagged," he said. "IPIC's 2020s are 13 bps wider, versus Mubadala's 50 bps widening."

In deal-related news, Indonesia-based PT Perusahaan Listrik Negara (PLN) was on a roadshow for its possible offering of $1 billion 10-year notes while Namibia was marketing a possible eurobond offering. And Colombia-based Banco de Bogota mandated bookrunners for its $1 billion offering of 10-year notes.

Lebanon sees two-way flow

In trading on Wednesday, Abu Dhabi National Energy Co. (TAQA) still had a few Street shorts, a trader said. And Lebanon saw some more flow.

"In fact, there was some rare two-way flow in Lebanon," he said. "That credit has just held in so well, but it should probably let some paper go, given outperformance."

Said another trader: "When you look at Lebanon, which is only 30 bps wider in the whole craziness, perhaps the lesson is to aim for more simple business models."

Most names from Qatar continued to trade heavy on Wednesday.

"Paper has come out recently and the back-off in the U.S. Treasuries is not helping price action and market confidence," he said.

Russia bounces

The liquidity and illiquidity premium continued to grow and curves were becoming ever more technical, another trader said.

"You can trade KazMunaiGaz (KMG), the Russia sovereign, the Turkey sovereign, the Ukraine sovereign and energy-linked corporates, but be prepared for some wide spreads in the rest," he said.

Ukraine was not seeing the bounce that Russia was on Wednesday, but the Ukraine sovereign was still firm. "Corporates remain spooked by the perception that there is an overhang of paper that needs to be placed," he said. "Russia is firmer for choice and Russian corporates are a mixed bag, with energy names outperforming."

KMG saw a big bounce on Wednesday.

Looking to Turkey, the banks continued to outperform on Wednesday, with particular strength shown by Isbank and Garanti Bankasi AS.

"They are now outperforming Russia's Alfa Bank by 175 bps," he said.

Morocco in focus

In trading from Morocco, the sovereign's 2017s were seen Wednesday at 101.5 bid, 102.5 offered, about 10 bps wider on the month.

"I covered my short on the Morocco's 2017s," a trader said. "It seems like paper came out on both the 2017s and the 2020s."

This came against the backdrop of news that the sovereign is seeking to raise $10 billion for tourism, he said.

Elsewhere in Africa, a seller was seen for Senegal, which pushed that name down.

BTA Bank, Nakheel laggards

Several bonds were not getting much love on Wednesday, a trader said.

On the list of "bonds the market loves to hate," he said, was Kazakhstan-based BTA Bank's 2018s, which were down at 47, and Ukraine-based OJSC Oschadbank's 2016s, which were at 81 mid after pricing in July at 100.75.

Turkey-based Yuksel Insaat's 2015s were at 80 mid while Nakheel's 2016s were at 67 mid, he said.

PLN, Namibia deals possible

In deal-related news, Indonesia-based electric company PLN is on a roadshow for its possible issue of $1 billion 10-year notes, a market source said.

Barclays Capital and Citigroup are the bookrunners for the marketing trip, which began Tuesday in Hong Kong and San Francisco and travels through Los Angeles, Singapore, London and Boston before wrapping up on Sept. 30 in New York.

And Namibia set out on a roadshow on Tuesday to market a possible eurobond offering, a market source said.

No other details were immediately available on Wednesday.

"It's good to see Namibia pushing ahead with their roadshow," a trader said.

Banco de Bogota taps dealers

In other deal-related news, Colombia-based lender Banco de Bogota mandated Citigroup, HSBC and JPMorgan as bookrunners for its planned $1 billion offering of 10-year notes, a market source said.

The notes are expected to price in October.

Market-watchers are also keeping an eye on Qatar National Bank and Abu Dhabi's Tamweel PJSC, which are said to be considering issuance.

"So there is supply in the pipeline," a trader said. "It will be interesting to see how any new issue trades and at what concession they come at."

He was particularly interested in the upcoming $1 billion sukuk offering expected in October from Bahrain via bookrunners Citigroup, BNP Paribas and Standard Chartered.

"That will be an interesting one, given the events of the past six months, and they are clearly turning to the sukuk market given that their 2020 trades at z-spread plus 435 bps," he said. "Sukuks are still in a different part of the fun park, as far as demand, technicals and pricing go."

© 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.