Glorious, Far East Consortium sell notes; Italy uncertainty spooks investors; spreads flat

By Christine Van Dusen

Atlanta, Feb. 25 - China's Glorious Property Holdings Ltd. and Far East Consortium International Ltd. priced notes on an up-and-down Monday for emerging markets assets as the broader markets undulated amid uncertainty about the Italian elections.

The potential for gridlock in Italy's elections on Monday led to "wild gyrations in the broader markets," a London-based trader said.

The Markit iTraxx SovX index spread started Monday at 177 basis points over Treasuries, unchanged from Friday. And the corporate index - seen at 229 bps over Treasuries on Friday - was also unchanged.

"There are fears that increased protest votes may lead to political stalemate," a London-based market source said.

Contributing to the poorer tone was the news that the United Kingdom was downgraded by Moody's Investors Service to Aa1 due to its fiscal situation.

Still, many bonds from the Gulf region found support on Monday morning, though liquidity dried up a bit as the day went on.

The recent perpetual notes from Abu Dhabi Islamic Bank were a particular standout on Monday, closing near 104 after pricing at par.

Abu Dhabi Islamic Bank, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S-only sukuk.

Also from the Middle East, the recent news that Standard & Poor's moved Qatar's Qtel International to negative watch didn't make any waves in the market.

"Saw balanced flow overall," the London trader said. "The 2023s went out unchanged, versus Thursday."

Two-way flow for TAQA

Flows were balanced elsewhere in the region, a trader said.

"Two-way on Abu Dhabi National Energy Co. (TAQA)," he said. "Some selling of Qatar sovereign, Ras al Khaimah and Emaar Properties."

Buying and selling were also noted for Emirates airline's 2016s and 2025s, the trader added.

"Higher-yielders are still holding," he said.

An analyst said, "Middle East and North Africa this morning are opening up fairly well supported."

Turkey bonds mostly unchanged

From Turkey, corporate bonds were mostly unchanged or slightly weaker on Monday, the analyst said.

"Russian high-yield names are opening 4 bps to 7 bps tighter," she said.

Following Friday's news that the Ukrainian government would not increase gas prices for households, sovereign bonds took a hit, said Svitlana Rusakova of Dragon Capital.

But "the damage done to the sovereign curve was limited," she said.

Ukraine's 2017s were seen at 109 bid, 110 offered while the 2021s traded at 105¼ bid, 106¼ offered

"In the corporate sector, Metinvest released in-line 2012 results," she said.

In response, the company's 2015s were quoted at 106 bid, 107 offered and the 2018s at 102 3/8 bid, 103 3/8 offered.

Far East prices bonds

In its new deal, China's Far East Consortium International sold RMB 1 billion 5 7/8% notes due March 4, 2016 at par to yield 5 7/8%, a market source said.

The notes priced at the tight end of talk, set at 5 7/8% to 6%.

Barclays, Citic Bank International, Citic Securities, Credit Suisse, Deutsche Bank and ICBC Asia were the bookrunners for the Regulation S deal.

In November, the issuer said it had decided not to proceed with an offering of dollar-denominated bonds given market conditions.

Far East Consortium is a Hong Kong-based business conglomerate with interests in property development, hospitality and car park operations.

Glorious Property does deal

China's Glorious Property Holdings sold $250 million 13¼% notes due March 4, 2018 at par to yield 13¼%, a market source said.

The notes priced in line with talk, set at 13¼%.

Citic Securities Corporate Finance (HK) Ltd., Deutsche Bank AG, Singapore Branch, Haitong International Securities Co. Ltd., ICBC International Capital Ltd., J.P. Morgan Securities plc, Royal Bank of Scotland and UBS AG were the bookrunners for the Regulation S deal.

Proceeds will be used to refinance existing debt and for general corporate purposes.

The property developer is based in Shanghai.

America Movil plans tap

In other deal-related news, Mexico's America Movil is planning an increase of its 6.45% peso-denominated notes due on Dec. 5, 2022, a market source said.

BBVA, Citigroup, Credit Suisse, Deutsche Bank, HSBC and Morgan Stanley are the bookrunners for the Securities and Exchange Commission-registered transaction.

The current size of the issue is Ps. 15 billion.

America Movil is a Mexico City-based telecommunications company.

ADCB gives guidance

In other deal-related news, Abu Dhabi Commercial Bank has set price guidance for its two-tranche issue of benchmark-sized dollar-denominated notes due in five and 10 years, a market source said.

The five-year tranche is being talked at a spread in the mid-swaps plus 180 bps area. The 10-year notes are being talked at the mid-swaps plus high-200 bps area.

Abu Dhabi Commercial Bank, Barclays, ING, JPMorgan, National Bank of Abu Dhabi and RBS are the bookrunners for the Regulation S deal.

"Think both deals look OK in this environment, although no further confirmation on issue size as yet," a London-based analyst said.

Sberbank sets talk

Russia's Sberbank has set price guidance at the 7½% area for a five-year issue of lira-denominated bonds, a market source said.

HSBC, JPMorgan and Sberbank are the bookrunners for the Regulation S only deal.

The notes are expected to price this week.

Sberbank is a Moscow-based lender.

GarantiBank picks bookrunners

Turkey's GarantiBank has mandated BNP Paribas, Deutsche Bank, Goldman Sachs, Mitsubishi UFJ Securities and Standard Chartered Bank as bookrunners for a Turkish lira-denominated issue of notes, a market source said.

The notes will be marketed during a roadshow that begins Tuesday in London and New York and ends Wednesday in London and Boston.

GarantiBank is a lender based in Istanbul.

Malaysian bank deal ahead

Export Import Bank of Malaysia is planning a $1 billion issue of Islamic bonds with five leads, a market source said.

HSBC, Nomura Securities, BNP Paribas, Malayan Banking and CIMB Group are the bookrunners for the deal.

And Russia's Norilsk Nickel set price talk for its RUB 35 billion issue of three-year notes at 7.9% to 8.11%, a market source said.

No other details were immediately available on Monday.

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