Indonesia sells $3 billion notes; spreads tighten again; investors seek long-dated paper

By Christine Van Dusen

Atlanta, April 8 - Indonesia, Turkey's Turkiye Vakiflar Bankasi TAO (VakifBank), China's CIFI Holdings Group Co. Ltd. and Singapore's Swiber Holdings Ltd. sold notes on Monday as spreads tightened and investors looked for long-dated bonds.

As tensions in the Korean peninsula continued to affect the broader markets, the Markit iTraxx SovX CEEME ex-EU index spread on Monday narrowed by 7 basis points to Treasuries plus 200 bps. The corporate index tightened too, moving in 9 bps to Treasuries plus 228 bps.

"With the long-term view that core rates are heading higher in the medium-term, now is the time to get some new issuance done, and the longer the duration, the better," a London-based analyst said.

Also helping the tone for emerging markets assets: Last week, inflows into dedicated bond funds rose to $872 million, and hard-currency funds gained ground.

"This all sets us up for an interesting few weeks with U.S. Treasury supply this week, and these core yields should prove interesting to issuers like Russia," she said.

Investors, anxious to pick up some long-duration paper, "found little in the Street," she said. "And the long end of curves quickly tightened, post-non-farm payrolls."

Against this backdrop, Indonesia priced its $3 billion two-tranche issue of dollar-denominated notes due April 15, 2023 and 2043.

The deal included $1.5 billion 3 3/8% notes due 2023 that priced at 98.952 to yield 3½%. The notes were talked at a yield in the 3.55% area.

The second tranche totaled $1.5 billion 4 5/8% notes due in 2043 that priced at 98.012 to yield 4¾%. Final guidance was set at the 4.8% area.

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

VakifBank prices bonds

In its new deal, Turkey-based lender VakifBank sold $600 million 3¾% notes due April 15, 2018 at 99.432 to yield mid-swaps plus 300 bps.

The notes were talked at a spread in the 305 bps area.

BofA Merrill Lynch, Citigroup, Commerzbank and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal.

CIFI prints notes

Monday also saw China-based property developer CIFI Holdings Group price $275 million five-year notes at par to yield 12¼%, a market source said.

The notes were talked at 12¼%.

Citigroup, Standard Chartered Bank, Deutsche Bank, HSBC and RBS were the bookrunners for the Regulation S deal.

The proceeds will be used for refinancing existing debt, for the acquisition of new projects or land for development, for the development of existing projects and for general corporate purposes.

In February the company canceled plans for a dollar-denominated offering of notes due to market conditions.

Swiber does deal

Singapore-based offshore oil and gas company Swiber printed S$160 million four-year notes at par to yield 7 1/8%, a market source said.

ANZ, DBS and OSK Investment Bank Bhd. were the bookrunners for the Regulation S deal.

And the United Arab Emirates' Sharjah Islamic Bank set initial price talk in the low-3% area for its upcoming benchmark-sized issue of dollar-denominated Islamic bonds due in five years, a market source said.

Al Hilal Bank, HSBC, Kuwait's Liquidity Management House and Standard Chartered Bank are the bookrunners for the Regulation S deal.

Slovenia trades up

In trading, Slovenia's 2022 notes, which traded with a 93 handle last week, closed Monday at 99.25.

"Turkey's long end rallied," the analyst said, pointing out that the notes were 25 bps tighter on the week.

"Russia's 2042s are also 6 points higher, or 15 bps tighter," she said.

Sekerbank deal in focus

One London-based trader was keeping an eye out for the upcoming issue of notes from Turkey's Sekerbank TAS.

The lender has mandated Citigroup, Standard Chartered Bank and UniCredit as the bookrunners for a dollar-denominated offering of bonds in a Rule 144A and Regulation S deal.

"Sekerbank is looking for an up to $500 million debut eurobond deal with a potential maturity of five years," the trader said. "The roadshow is expected to conclude this week, with pricing on Wednesday."

Kazakhstan-based BTA Bank owns 34% of the company's equity, and "the quality of the owner will weigh on the credit, with a potential upside if the Kazakh lender decides to exit," the trader said.

Aralco picks bookrunners

In other news, Brazil's Aralco SA has mandated Banco Votorantim, Credit Suisse, HSBC, Itau BBA and Pine for a dollar-denominated offering of notes that will be marketed during a roadshow, a market source said.

The marketing trip will begin April 10 in Santiago, Chile, and London and will travel to New York and Boston before concluding on April 15 in Los Angeles.

A Rule 144A and Regulation S deal is expected to follow.

Aralco is a Sao Paulo-based ethanol and sugar producer.

Bank of Ceylon, BTG set talk

Sri Lanka's Bank of Ceylon gave initial guidance in the 5½% area for a dollar-denominated offering of five-year notes via UBS.

And Brazil's BTG Investments LP set initial price talk for its dollar-denominated offering of benchmark-sized notes due in five years at the 4¾% area, a market source said.

BofA Merrill Lynch, BB Securities, Bradesco BBI, BTG Pactual and Citigroup are the bookrunners for the deal.

BTG Investments is part of Brazil's Banco BTG Pactual, based in Sao Paulo.

OAS roadshow ahead

Brazil-based infrastructure company OAS SA will set out on Wednesday for a roadshow to market a dollar-denominated offering of perpetual notes, a market source said.

BB Securities, Bradesco BBI, BTG Pactual, Deutsche Bank, HSBC, Itau BBA and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The roadshow begins in Hong Kong and will travel to Singapore, London, Switzerland and New York.

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