Turkey, Kexim tap market; LatAm corporates widen; guidance emerges from Dubai Investments

By Christine Van Dusen

Atlanta, Feb. 12 - Turkey and Korea Export-Import Bank (Kexim) sold notes on Wednesday as emerging markets looked solid in trading and investors gobbled up the limited supply.

"It's all pretty much a rock, and $800 million worth of supply so far this year is simply not enough for the demand out there," a trader said, noting it was "another impressive day."

Risk-on sentiment continues to grow, a London-based analyst said.

Long-dated bonds from Turkey were tighter Wednesday by 7 basis points, and Turkish corporates and banks were mixed, she said.

"Some sellers in the market are emerging," she said. "Russian names are also performing well."

From Africa, some buyers emerged for paper from Nigeria while Ghana moved about 30 bps wider amid poor liquidity, a trader said.

"Morocco continues to hold and trade OK, as does Egypt and Tunisia," he said. "Senegal traded a little lower on the day, having had a good move this week."

Angola improved by 10 bps on the week, printing at 107.40 on Wednesday afternoon.

"The South Africa sovereign is a couple better overall," he said.

Latin American corporate bonds moved lower and wider as the session went on, a New York-based trader said.

"Clients are slightly better sellers in here," he said. "Some high-grade, price-based credits are holding on and tightening, but others are lower and getting hit."

Brazil's Vale SA and Petrobras were about 5 bps wider, he said.

"With the Fragile Five fears all but contained for now, especially in Turkey, this weakness could clear itself up very quickly," he said.

Against this backdrop, Dubai Investments Park Development Co. gave guidance, and both Russia-based OJSC Gazprom and Brazil's Odebrecht Offshore Drilling Finance Ltd. set roadshows.

Turkey sells notes

Turkey priced a $1.5 billion issue of notes due February 2045 to yield 6.7%, a market source said.

The notes were talked at 6¾% to 6 7/8%.

BofA Merrill Lynch, BNP Paribas and Goldman Sachs were the bookrunners for the Securities and Exchange Commission-registered deal.

Other details were not immediately available on Wednesday.

Kexim prices tap

Korea's Kexim priced a A$50 million increase of its existing A$100 million 5 1/8% notes due Feb. 25, 2020 (expected ratings: Aa3/A+/AA-) at 99.823, a market source said.

ANZ and National Australia Bank were the bookrunners for the deal.

Gazprom picks banks

Russia-based Gazprom has mandated Credit Agricole CIB, Gazprombank and JPMorgan as bookrunners for a euro-denominated offering of notes that will be marketed during a roadshow, a market source said.

The roadshow for the Regulation S-only deal will begin on Monday.

Gazprom is a Moscow-based natural gas producer.

Odebrecht to hit road

Brazil's Odebrecht will set out on Thursday for a roadshow to market a dollar-denominated and benchmark-sized offering of notes due on Oct. 1, 2022, a market source said.

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

The roadshow will begin on Thursday in Houston and travel to the West Coast, New York, London, Boston, New Jersey and Chicago before concluding on Feb. 20.

Odebrecht is an engineering, construction, chemical and petrochemical conglomerate based in Salvador da Bahia, Brazil.

The company's 2042 notes moved about a 1/2-point lower in trading, along with Treasuries, the New York-based trader said.

Dubai Investments sets talk

Dubai Investments Park Development Co. - a subsidiary of Dubai Investments PJSC - set initial talk in the mid-swaps plus 300 bps area for its $300 million issue of Islamic bonds due in five years, a market source said.

Al Hilal Bank, Citigroup, Dubai Islamic Bank and Emirates NBD are the bookrunners for the Regulation S sukuk.

"Given the lack of [Gulf region] supply so far this year, we expect it won't face too many issues," the analyst said.

Said a trader, "Rated BB, this is the second deal for the Gulf region this year. Offer-side liquidity on plenty of bonds remains challenging, so on pure supply, demand and technicals this one should have plenty of support."

In the gray market, the notes traded up 60 cents on Wednesday.

Middle East in focus

Dubai bonds remained well bid on Wednesday morning, a London-based trader said.

"Dubai Holding's 6% 2017 sterling notes are moving higher," he said, adding they were "going through at 105 3/8 in the Street."

And Aldar Properties PJSC received solid support, with its 2018 dollar bonds ticking up in trading.

"It is still the best value in Abu Dhabi, to my mind," he said, adding the issuer's paper "closes 14 bps better."

Also solid on Wednesday were International Petroleum Investment Co., Bahrain and Mubadala Development Co. PJSC.

"Emaar Properties still has more buyers around," he said. "It's again popular as accounts get used to the investment-grade rating."

Good bids were spotted for Kuwait Projects Co. (Kipco) bonds, he said.

Perpetuals active

Perpetual notes from the Middle East were once again active, the London trader said.

"Better buyers for choice," he said. "Abu Dhabi Commercial Bank's were last up at 100.45 and Qatar National Bank's were popular, just shy of 101."

The perpetuals from GEMS MEA Sukuk Ltd. saw two-way activity.

"This one seems to have found its feet again, after some decent supply," he said.

Slovenia trades up

The new $3.5 billion of five and 10-year notes from Slovenia performed well in trading, a trader said.

Both tranches were up about 1¼ points from reoffer on Wednesday.

The $1.5 billion 4 1/8% five-year notes priced at 99.331 to yield Treasuries plus 280 bps.

The $2 billion 10-year notes carried a 5¼% coupon and priced at 99.247 to yield Treasuries plus 280 bps.

Barclays, Goldman Sachs and JPMorgan were the bookrunners for the Rule 144A and Regulation S transaction.

Ukraine sees sellers

Bonds from Ukraine have seen some selling so far this week, said Svitlana Rusakova of Dragon Capital.

"Bids quickly retreated as fundamental uncertainty made investors extremely cautious," she said.

Overall, the tone has been "quite shaky," she said.

"Banks could not find bids and moved lower by 1 point to 2 points," she said.

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