Concerns about global growth abound; Odebrecht deal on horizon; Qatar notes struggle

By Christine Van Dusen

Atlanta, May 24 - Emerging markets assets limped into the holiday weekend on Friday after a difficult week, given the news that the Federal Reserve could soon cut back its asset-purchase program.

"Asset market movements over the past two days have largely reflected increased expectations of Fed tapering, adding to concerns about global growth," according to a report from Barclays.

Still, several issuers took steps toward bringing new deals to the market, including Brazil's Odebrecht Drilling Norbe VIII/IX Ltd., China Eastern Airlines Corp. Ltd. and HSBC Corp. Ltd. (Singapore).

In trading on Friday, sovereign bonds from Qatar struggled, with the 2022s about 15 basis points wider on the week, a trader said.

Dolphin Energy's 2021s were seen at 115, about 20 bps wider.

But Abu Dhabi Islamic Bank's 2015s traded up during the session at 105, about 12 bps tighter on the week.

Meanwhile, Sharjah Islamic Bank's 2018s were quoted Friday at 99¼ bid, 99¾ offered after pricing at par to yield 2.95%.

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

And Kuwait-based Kipco's 2020s saw two-way activity in trading, the trader said.

In other news, emerging markets bond funds saw inflows of $890 million for the week ended May 22, according to a report from data-tracker EPFR Global.

That is up from $835 million the previous week.

"Local currency funds are outgaining hard currency ones by a roughly 4-to-1 margin," said Cameron Brandt, senior analyst with EPFR.

"At the country level, China bond funds are the clear favorites while Brazil is losing favor," Brandt said.

Odebrecht roadshow ahead

Brazil's Odebrecht Drilling has set a roadshow for May 27 to June 5 for a dollar-denominated issue of benchmark-sized notes, a market source said.

HSBC, Itau BBA and Morgan Stanley are the global coordinators. BB Securities, BNP Paribas and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for relief from existing project finance obligations.

The roadshow will begin May 27 in Santiago, then travel to New York, Hong Kong, Singapore, Lima, Boston, London, Houston, Los Angeles and Switzerland before concluding on June 5.

The issuer is a subsidiary of Odebrecht Oleo e Gas SA, an offshore drilling company based in Rio de Janeiro.

Chinese airline picks leads

China Eastern Airlines has mandated Agricultural Bank of China, Deutsche Bank, HSBC and Standard Chartered Bank to lead a roadshow for a possible issue of notes, a market source said.

The marketing trip will begin on May 27 and take place in Hong Kong and Singapore.

The airline is based in Shanghai.

Bank plans notes

HSBC Corp. Ltd. (Singapore) is looking to price a benchmark-sized issue of renminbi-denominated notes, a market source said.

HSBC is the bookrunner for the Regulation S deal, which is expected to launch in the near future.

This followed Thursday's pricing by Mexico-based retail company Grupo Famsa SAB de CV's $250 million 7¼% notes due 2020 at 99.325 to yield 7 3/8%, a market source said.

Credit Suisse and Citigroup were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to pay for a tender offer and consent solicitation for the company's dollar notes due in 2015.

Morocco notes weaken

Thursday's new deal from Morocco - a $500 million tap of its notes due 2022 and a $250 million tap of its notes due 2042 - was weak in trading on Friday, a market source said.

The 2022 notes carried a 4¼% coupon and priced at 100.263 to yield Treasuries plus 220 bps. On Friday the notes traded at 98½ bid, 99½ offered.

The 2042 notes carried a 5½% coupon and priced at 97.464 to yield Treasuries plus 237.5 bps. The notes were sighted Friday at 96½ bid, 98½ offered.

Barclays, BNP Paribas, Citigroup and Natixis were the bookrunners for the Rule 144A and Regulation S deal.

"Poor timing plus a poorly placed tap equals 45 bps wider on the dollar bonds in a week," a trader said.

Africa in focus

Also from Africa, Tunisia's 4½% euro notes due 2020 - sighted Thursday at 95 bid, 97 offered - were unchanged on Friday.

Egypt's 5¾% 2020 dollar notes traded Thursday at 89 bid, 94 offered. On Friday the notes were quoted at 90½ bid, 95½ offered.

Senegal's 8¾% notes due 2021 were seen Friday at 117½ bid, 119½ offered, versus Thursday's levels of 119½ bid, 1211/2.

Deal oversubscribed

The new issue of $400 million 6½% notes due 2018 from Hong Kong-based Central China Real Estate Ltd. drew more than $1.5 billion in orders from 104 accounts, a market source said.

The notes came to the market at par to yield 6½% with bookrunners Deutsche Bank, DBS Bank, JPMorgan, Morgan Stanley, Nomura Securities and UBS.

The proceeds will be used to redeem all $300 million of the company's outstanding 12¼% senior notes due 2015 on June 21, to fund new and existing property projects, including land premium, and for general corporate purposes.

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