Sovcomflot, Evraz tap primary market; backdrop remains ‘favorable’; Oman trades higher

By Christine Van Dusen

Atlanta, June 9 – Russian issuers continued their march to market on Thursday, with pricing from names like PAO Sovcomflot and Russia's Evraz Group SA, as sentiment for emerging markets assets remained strong.

“The favorable backdrop remains in place, ever since last week’s nonfarm payrolls,” a London-based strategist said. “The U.S. 10-year Treasuries have further dropped below the 1.7% threshold while oil prices continue to climb upwards.”

Investors are “betting the Fed will not hike in June and July meetings,” according to a report from Schildershoven Finance BV. “Meanwhile, the Chinese economy shows some positive fundamental signs.”

In trading, credit from South Africa continued to benefit from “positive surprises” from ratings agencies, the strategist said.

Moody's Investors Service, S&P and Fitch Ratings have all affirmed the sovereign's rating, even as political risk has risen.

The agencies expect “that the government will remain committed to fiscal and economic reforms,” he said.

In response, bonds have tightened as much as 20 basis points since last Thursday, he said.

“Going forward, we think that the rating-driven momentum will fade and risks will resurface,” he said. “Investors should take profit following the recent rally. We think that African supranational credit provides an attractive opportunity for a switch with a pick-up.”

Looking to Latin America, credit moved wider on the day but at the end of the session rebounded off its widest levels, a New York-based trader said.

Brazil's five-year credit default swaps spreads closed at 334 bps from 326 bps while Mexico's moved to 163 bps from 156 bps.

“Cash prices finish mostly unchanged after slumping earlier on as the continued rally in global rates helps to support the market,” he said. “Latin American high yield finishes mixed on the day, with Venezuela lower.”

Venezuela, PDVSA dip

Venezuela’s 2027s closed at 44.75 from 45.50 and PDVSA's 2017s closed at 69 from 69.50, the New York trader said.

Argentina's Bonar 2024s finished the day at 113.25 from 113.50 while the 2026s were unchanged at 105.75.

“Volumes are very light today, with better buyers,” he said.

Oman lifts

The new issue of notes from Oman – a $2.5 billion dual-tranche deal – was trading above reoffer on Thursday morning, a trader said.

The $1 billion 3 5/8% five-year notes that priced at 99.887 to yield mid-swaps plus 245 bps were spotted at 100.24 bid, 100.34 offered.

The $1.5 billion 4¾% 10-year notes that priced at 99.827 to yield mid-swaps plus 320 bps traded Thursday at 100.60 bid, 100.80 offered.

Citigroup, JPMorgan, MUFG, National Bank of Abu Dhabi and Natixis were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general budgetary purposes.

TAQA on deck

Market-watchers were whispering about Abu Dhabi National Energy Co.'s (TAQA) new issue of dollar-denominated notes, which could be structured in five- and 10-year tranches and come to the market as soon as June 13.

BNP Paribas, Citigroup, First Gulf Bank, HSBC, National Bank of Abu Dhabi and Societe Generale are the bookrunners for the Rule 144A and Regulation S deal.

Sovcomflot prints notes

In its new deal, Russia’s Sovcomflot priced $750 million notes due 2023 at par to yield 5 3/8%, a syndicate source said.

The notes were talked in the 5¾% area.

Citigroup and JPMorgan were the joint global coordinators and joint lead managers and bookrunners. ING, Sberbank CIB and VTB Capital were joint lead managers and bookrunners for the Rule 144A and Regulation S deal.

Sovcomflot is a maritime shipping company based in St. Petersburg, Russia.

Evraz sells bonds

Also on Thursday, Russia’s Evraz Group priced $500 million 6¾% notes due Jan. 31, 2022 at 99.983 to yield Treasuries plus 553.6 bps, a market source said.

Barclays, Gazprombank, ING, JPMorgan, Societe Generale CIB and VTB Capital were the joint bookrunners for the Regulation S deal.

Evraz is a vertically integrated steel making and mining company based in London with operations mainly in Russia.

Ooredoo sets roadshow

Qatar’s Oordeoo QSC will set out on Friday for a roadshow to market a dollar-denominated offering of bonds, a market source said.

HSBC is the global coordinator, and ANZ, BofA Merrill Lynch, Citigroup, DBS Bank, HSBC, Mizuho Securities, MUFG and QNB Capital are the joint lead managers and joint bookrunners for the Rule 144A and Regulation S deal.

Ooredoo is the Doha-based telecommunications company formerly known as Qtel International.

NLMK Group prices notes

On Wednesday, NLMK Group priced $700 million seven-year loan participation notes at par to yield 4½%, a market source said.

Deutsche Bank, ING, JPMorgan and Societe Generale CIB were the bookrunners for the deal.

The notes were issued alongside a tender offer.

NLMK is based in Lipetsk, Russia.

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