Bahrain, Dubai's Al Futtaim, Russia's VEB, Korea's KDB do deals; investors await EU summit

By Christine Van Dusen

Atlanta, June 27 - The Kingdom of Bahrain, Dubai's Majid Al Futtaim Holding LLC, Russia's Vnesheconombank (VEB) and Korea Development Bank (KDB) priced notes on a somewhat solid Wednesday for emerging markets assets, even as most investors remained focused on the upcoming summit of European leaders.

"Another fairly active day," a London-based trader said. "Broader markets are closing fairly well."

In trading, Abu Dhabi National Energy Co. (TAQA) was a standout on Wednesday, and solid interest was shown for bank names from Qatar, Abu Dhabi and Saudi Arabia.

"Some bonds in this space are just super hard to source and replace at the moment, and I can't see that improving into the next few months," the trader said.

In its highly anticipated new deal, Bahrain sold $1.5 billion 6 1/8% notes due July 5, 2022 at 99.867 to yield 6.143%, or mid-swaps plus 437.5 basis points, a market source said.

The notes priced tighter than talk, which was set at mid-swaps plus 462.5 bps.

Citigroup, Gulf International Bank, JPMorgan and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

"With a decent book they were able to bring her in to mid-swaps plus 437.5 bps," a trader said prior to the pricing. "I still think this goes OK, however this is a lot different from [initial talk of] $1 billion at 462.5 bps. The gray obviously came down from those lofty bids this morning."

Meanwhile, the sovereign's 2018 notes were trading at 108.87 bid, 109.37 offered.

"The 2018 sukuk has had a good run," he said. "It's been well sought after and is 25 bps tighter on the month."

Al Futtaim sells bonds

Majid Al Futtaim Holding priced a $500 million issue of 5¼% seven-year notes at par to yield mid-swaps plus 389.7 bps, according to a syndicate source.

The deal priced tight of talk, which was set at 5 3/8%.

The notes were issued under the property developer's $2 billion medium-term note program.

JPMorgan, National Bank of Abu Dhabi, Barclays Capital, Standard Chartered and UBS were the bookrunners for the Regulation S transaction.

Shortly after pricing, the notes were quoted at 100.25 bid, 100.75 offered.

Later, Majid Al Futtaim notes were seen at 100.30 bid, 100.55 offered and 100.20 bid, 100.40 offered.

"There's good two-way action so far, with OK retail investor buying and Street sellers," a trader said.

The notes closed Wednesday at 100.375 bid, 100.50 offered.

"The Street did have paper to go between 100.25 bid, 100.375 offered, and that is where the majority of bonds cleared late today," he said. "The bond is only $500 million, so once these loose bonds get out of the way and locals top up allocations, I think we will be OK on this one."

The total book exceeded $2 billion, according to a syndicate source.

VEB, KDB print notes

In another new deal, Russian lender VEB priced a $1 billion issue of 6.025% notes due July 5, 2022 at par to yield 6.025%, or Treasuries plus 440 bps, a market source said.

Credit Agricole, JPMorgan, Deutsche Bank and HSBC were the bookrunners for the deal.

Seoul-based Korea Development Bank priced a $500 million add-on to its existing 3½% notes due Aug. 22, 2017 at 104.422 via Barclays Capital, Citigroup, KDB Asia, Standard Chartered Bank and UBS in a Securities and Exchange Commission-registered deal.

The original issue of $750 million notes due 2017 was issued on Feb. 22 at a spread of 275 bps over Treasuries.

Proceeds will be used for the bank's general options, including extending foreign currency loans and repaying maturing debt and other obligations.

Yieh Phui sets talk

In other deal-related news, Taiwan-based steel producer Yieh Phui Enterprise Co. Ltd. set price talk at the 4½% area for its planned renminbi-denominated issue of two-year notes, a market source said.

The deal size is expected to be about RMB 300 million.

BNP Paribas is the bookrunner for the Regulation S deal.

TAQA 'trades really well'

In trading on Wednesday, Abu Dhabi-based TAQA's 2012 notes were quoted at 101.10 bid, 101.50 offered and its 2036 notes at 111.62 bid, 112.62 offered.

"This credit trades really well at the moment," a trader said. "Qatar names opened tighter."

Also, the recent $650 million 7% notes from Dubai's Jebel Ali Free Zone (Jafza) - which priced at par to yield Treasuries plus 588.9 bps - opened unchanged at 105.125 bid, 105.625 offered, he said.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD, National Bank of Abu Dhabi and Standard Chartered were the bookrunners for the Regulation S deal.

Middle East in focus

Saudi Arabia-based commercial lender Banque Saudi Fransi's 2017 notes were trading on Wednesday at 100.75 bid, 101.50 offered after pricing in May at par to yield mid-swaps plus 185 bps.

Citigroup, Credit Agricole and Deutsche Bank were the bookrunners for the Regulation S deal.

Saudi Electricity Co.'s 2017 notes - which traded were seen last week at 100.50 bid, 101.25 offered - opened Wednesday at 100.87 bid, 101.37 offered and later traded at 100.75 bid, 101.25 offered.

Dar al-Arkan's bonds continued to tick along, trading in the mid- to high-105s.

"Some of the Dubai names feel a little more two-way to me here," he said. "They have had a great run, and taking some chips off the table, I suspect, appealed to some, especially ahead of the Bahrain and MAF supply."

BTA Bank deteriorates

From Kazakhstan, the banking sector remained in the news after reports of further deterioration in asset quality and profitability, according to a London-based analyst.

"This is largely driven by the deterioration seen at BTA Bank, which has now reported non-performing loans of 84%," she said. "Moody's has recently confirmed the negative outlook on the sector. In terms of market performance, the sector will continue to be largely dominated by the pending BTA restructuring and the Alliance Bank and Temirbank merger."

Aleesia Forni contributed to this article.

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