Korea's Kookmin, Russian Agricultural Bank do deals; EM bonds fairly resilient, stable

By Christine Van Dusen

Atlanta, Oct. 7 - South Korea's KB Kookmin Bank and OJSC Russian Agricultural Bank sold notes on a relatively active Monday with balanced flows for emerging markets assets.

The Markit iTraxx SovX CEEME ex-EU index spread on Monday opened at 394 basis points, wider than Thursday's 244 bps.

"Markets in Asia, the dollar and oil came under pressure this morning as the weekend showed no signs of the U.S. government impasse resolving," a London-based analyst said. "Asian stocks also got hit by the World Bank's lowering of 2013 to 2014 gross domestic product forecasts for China and other developing East Asian economies."

Meanwhile, some bonds from central and emerging Europe, the Middle East and Asia were "relatively stable," she said, "given the aforementioned factors that point to the contrary."

Flows were balanced on trading on Monday, a London-based trader said.

"We're seeing supportive asset prices," he said. "DPWorld's 2037 is trading at 103. This credit is over 50 bps tighter on the month now."

Investors showed some interest in perpetual notes and longer-dated assets on Monday, he said.

In other trading, the 2015 notes from Jordan were back to par, he said.

Meanwhile, several issuers advanced deals, including Slovakia's Zapadoslovenska energetika AS (ZSE), the Emirate of Ras al Khaimah, Turkey's Turkiye Is Bankasi AS (Isbank), Brazil's Banco do Brasil SA, China Taiping New Horizon Ltd. and Russia's OJSC Bank St. Petersburg.

The London trader was keeping an eye out for the upcoming dollar-denominated and benchmark-sized notes from Qatar's Al Khalij Commercial Bank.

The Regulation S deal - via BNP Paribas, HSBC, QNB Capital and Standard Chartered Bank - is expected to price on Tuesday.

Al Hilal trades higher

The recent notes from Abu Dhabi-based Al Hilal Bank - $500 million of 3.267% notes due 2018 that priced at par - traded between 101.1 and 101.2 on Monday.

"Still holding in very well," the London trader said.

HSBC, Standard Chartered Bank, Citigroup and National Bank of Abu Dhabi were the bookrunners for the Regulation S offering of Islamic bonds.

Sabic ticks up

The recent notes from Saudi Arabia-based Saudi Basic Industries Corp. (Sabic) - $1 billion 2 5/8% five-year notes that priced at 99.449 - traded Monday at 99.2 bid, 99.4 offered, a market source said.

The notes had traded 99.15 bid, 99.35 offered on Friday.

The notes came to the market at a spread of Treasuries plus 130 bps via Citigroup, HSBC Securities, Mizuho Securities and RBS Securities Inc. in a Regulation S deal.

"The Street was a seller, but I saw some client demand," a trader said. "The bond is up 12 bps versus issue spread."

Ukraine in focus

Bonds from Ukraine entered the week on fairly solid footing, with the sovereign's 2020s ending Friday up about 2 points, said Svitlana Rusakova of Dragon Capital.

Naftogaz continued to lag following rumors that the corporate had not paid its coupon, as did bonds from the State Export-Import Bank of Ukraine (Ukreximbank).

"The 2015s are now yielding around 17%," she said. "Other quasi-sovereigns saw some demand."

OGX continues slide

OGX Petroleo e Gas Participacoes SA saw its debt slide further into the single digits on Monday as Reuters reported that the company was meeting with creditors in an effort to avoid a bankruptcy filing.

The company also is seeking a debtor-in-possession loan in case talks fall through, according to the report.

A trader said OGX's debt was the day's biggest loser, as both the 2018 and 2022 maturities dropped 3 points.

The trader placed the 8½% and 8 3/8% notes at about 6, though he said he had heard the bonds were inching back up toward the end of the day to end in a 7-to-8 context.

On Friday the notes were trading between 8 and 9.

OGX - the company majority owned by billionaire Eike Batista - missed a $44.5 million coupon on the 2022 paper on Oct. 1. The company has 30 days to pay the interest, or find itself in default.

OGX has said it will not pay the funds during the grace period. Should a bankruptcy filing emerge, it will be a record-holding corporate debt default in all of Latin America.

OGX has about $3.6 billion of bond debt.

LatAm quiet, strong

In other trading on Monday, corporate bonds from Latin America were quiet at the open but with a strong tone, a New York-based trader said.

"We watched a number of credits trade up at the offers with stronger bids on most others," he said. "Spread credits held OK."

Bonds from Petroleo Brasileiro SA (Petrobras) were unchanged from Friday, even following a downgrade.

"Although there was no selling to speak of," he said.

Peruvian corporates and banks were also unchanged on Monday.

"But both felt more apt to take another leg up, as some credits clearly did," he said.

And Chilean bonds continued to perform fairly well on light volumes.

Kookmin does deal

South Korea-based Kookmin Bank priced $500 million three-year notes at par to yield Libor plus 125 bps, a market source said.

The notes priced at the tight end of talk, set at Libor plus 125 bps to 130 bps.

BofA Merrill Lynch, Barclays, BNP Paribas, Credit Suisse, HSBC and Mizuho Securities were the bookrunners for the Rule 144A and Regulation S deal.

Russian lender issues bonds

Russian Agricultural Bank priced $500 million 10-year notes at par to yield 8½%, a syndicate source said.

The notes were talked at a yield in the 8½% area.

BNP Paribas, Credit Agricole, Goldman Sachs and JPMorgan were the bookrunners for the Rule 144A and Regulation S transaction.

The lender has headquarters in Moscow.

ZSE talks notes

Slovakia's ZSE set final guidance for its two-tranche issue of €315 million five-year notes and €315 million 10-year notes, a market source said.

The five-year notes were talked at a spread of mid-swaps plus 160 bps to 165 bps.

The 10-year notes were talked at a spread of mid-swaps plus 190 bps to 105 bps.

Citigroup and Societe Generale are the bookrunners for the Regulation S-only deal.

Pricing was expected to take place on Monday.

The issuer is a Bratislava, Slovakia-based electricity utility company.

Emirate sets talk

Ras al Khaimah set talk for its five-year issue of dollar-denominated Islamic bonds at the mid-swaps plus 200 bps area, a market source said.

Al Hilal Bank, Citigroup, Mashreqbank, National Bank of Abu Dhabi and Standard Chartered Bank are the bookrunners for the Regulation S deal.

The notes are expected to price Tuesday.

"Last week I thought 180 bps to 185 bps over mid-swaps was fair enough for this one, so let's see where she prices," a trader said.

Isbank sets roadshow

Turkey's Isbank is on a roadshow this week in London and New York for a possible issue of dollar- or lira-denominated notes, a market source said.

BNP Paribas, Commerzbank, JPMorgan, Morgan Stanley and Standard Chartered Bank are the bookrunners for the Rule 144A and Regulation S deal.

The notes are expected to carry various maturities.

BDB mandates bookrunners

Brazil's Banco do Brasil has mandated BB Securities, Citigroup, JPMorgan, and Mizuho Securities for a possible issue of yen-denominated notes, a market source said.

A fifth bookrunner may be attached to the deal, but details on the name were not immediately available on Monday.

Roadshow on tap for Taiping

China Taiping New Horizon has mandated Credit Suisse, JPMorgan, Agricultural Bank of China, Bank of China, CCB International, CICC and Taiping Securities as bookrunners for a dollar-denominated offering of notes and a roadshow, a market source said.

The investor meetings will be held in Hong Kong and Singapore beginning Tuesday.

A Regulation S deal is expected to follow.

The issuer is a wholly owned subsidiary of China Taiping Insurance Holdings Co. Ltd., an insurance conglomerate based in Hong Kong.

Russian bank markets deal

Russia's Bank of St. Petersburg has mandated JPMorgan and VTB Capital as bookrunners for an offering of dollar-denominated notes that is being marketed during a roadshow, a market source said.

The Regulation S roadshow began Monday and will be held in the United Kingdom and Switzerland.

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