Turk Telekom prices $500 million of notes; spreads improve; LatAm, Africa quiet; EuroChem eyed

By Rebecca Melvin

New York, Feb. 21 – Emerging markets debt market players were eyeing pricing of the Turk Telekomunikasyon AS dollar-denominated bonds early Thursday that were being talked at a 7 1/8% to 7¼% yield for a six-year note of $500 million size.

Later the Turk Telekom deal priced with a 6 7/8% coupon at 99.396. Pricing was tight to guidance and initial price talk in the 7 3/8% yield area.

Order books at the time of guidance were in excess of $2 billion.

The deal was “probably about 25 basis points tighter since announcement. It’s going very well,” a London-based market source said at the time of guidance.

The Rule 144A and Regulation S deal was sold via joint bookrunners BofA Merrill Lynch, Citigroup Global Markets, ING Bank NV, MUFG Securities EMEA plc and Societe Generale CIB.

Proceeds are going to be used to refinance existing debt, and application is being made to list the bonds on the Irish Stock Exchange.

The issuer is an Ankara, Turkey-based telecommunications company.

Meanwhile spreads overall improved against a drop in U.S. Treasuries, a second source said. The price on the benchmark 10-year Treasury was last down 0.41%, lifting the yield to 2.693%.

Oman was a big mover on Thursday after the sovereign said it would not borrow as much as previously expected. Its sovereign curve tightened by 15 bps to 20 bps on the day, the source said.

Meanwhile, EuroChem Group AG announced that it plans to price a dollar-denominated five-year note, and the fertilizer producer will be starting meetings with fixed-income investors next week, with stops in Moscow, Zurich and London.

Despite these deals, the new issue calendar is not as robust as it was last year at this time. Latin America and Africa has been radio silent in contrast to this time last year when a good mix of sovereign and corporate Latin America bond issuers were on the forward calendar and then priced, and Kenya was prepping a dual-tranche of 10-year and 30-year notes. Meanwhile the Middle East and Emerging Europe & Central Asia regions have perked up in recent sessions. Last year this time Moldova’s Trans-Oil Group was on the calendar for a $225 million five-year note that was talked in the 10% yield area. Belarus and Slovenia were also pricing.

This week saw a triple tranche for $4 billion from the Republic of Egypt, which saw record investor demand, was well executed and improved in the after market, and the Republic of Cyprus priced €1 billion of 2¾% notes due 2034 for a yield spread of mid-swaps plus 175 basis points. That pricing was tight to initial price thoughts in the mid-swaps plus 200 bps area.

Citigroup, Goldman Sachs and HSBC were bookrunners of the Regulation S deal, which priced on Wednesday.

The United Arab Emirates’ MashreqBank PSC also priced at 175 basis points over mid-swaps yield for its $500 million of 4¼% five-year notes that priced on Tuesday. And First Abu Dhabi Bank PJSC issued $100 million of zero-coupon notes due 2049 and $30 million of floating-rate notes due 2024 on Tuesday, according to filings with the London Stock Exchange.

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