Banco de Chile does deal; EM continues to bounce back; volumes still thin; Ziraat on deck

By Christine Van Dusen

Atlanta, June 27 - Banco de Chile SA sold notes on Thursday as emerging markets assets continued to recover, with buyers outpacing sellers and spreads flat or tighter, though volumes remained thin and liquidity was lacking.

"The market bounced today as US Treasuries stabilized and shorts were squeezed," a London-based trader said. "Another busy day. This has been some week."

The Markit iTraxx SovX CEEME ex-EU index was unchanged on Thursday at 240 basis points over Treasuries while the Markit iTraxx Crossover index spread - seen Wednesday at 493 bps - moved in to 483 bps on Thursday.

"Good opening in our market, with better bids across the board, although there is a noticeable lack of liquidity with prices gaping," a London-based analyst said.

Bonds from Turkey were up about 1½ points, or 10 bps tighter, while Turkish and Russian corporates tightened 2 bps to 3 bps.

"Strong start in the Middle East and North Africa," she said. "Some retail selling."

Buyers were seen early in the session for Saudi Electricity Co. (SECO), Dubai, Emirates airline and the perpetual notes from Emirates NBD, a trader said.

"Emirates NBD's perpetuals are popping their head above 90 now after a low yesterday of 873/4," he said. "SECO's 2022s are back above par, and still a good value versus the 2023 dollar notes."

Abu Dhabi National Energy Co.'s (TAQA) 2023s closed at 93 on the bid side after a level of 89 earlier this week.

"Very choppy week," a trader said. "Expect a quiet day tomorrow but probably more stability if we can hold this 2½% to 2.48% level on the 10-year Treasury."

DEWA moves up

In other trading on Thursday, Dubai Water and Electricity Authority's 2020s traded at 112 5/8 during the afternoon, up from the previous day's 109.

"As flaky and thin as it was on the way down earlier in the week, so it was on the way up today. It's just a thin, whippy market," the London trader said. "One European account was topping up fund holdings on the more liquid benchmark names this afternoon. We also saw fairly steady retail investor demand for paper."

Middle East in focus

Abu Dhabi Islamic Bank's perpetuals, which priced at par, traded Thursday between 97 and 981/4, while Dubai Islamic Bank's perpetuals were quoted between 94½ and 951/2. Those notes also priced at par.

"Qatar's 2042s see good interest going up through 106½ and 1071/2," a trader said. "Very good demand for the Qatar sovereign. Overall it's 6 bps to 11 bps tighter."

Ooredoo widens

Qatar's Ooredoo QSC, formerly known as Qtel International, suffered, with bonds widening 35 bps on the week. This followed news that the company won a license to operate in Myanmar.

"There is clearly huge potential but also large costs," a trader said.

Meanwhile, Bahrain Mumtalakat Holding Co.'s 2015s were trading between 101 and 102.

Ukraine bonds get a lift

From Ukraine, sovereigns have been lifted during this later part of the week, said Svitlana Rusakova of Dragon Capital.

"The overall tone was positive with a few better offers getting lifted," she said. "Corporates remained a bit heavy but offers moved higher."

The 2015 notes from the State Export-Import Bank of Ukraine (Ukreximbank) were offered in good size at 97½ and absorbed by the market, she said.

Latin American credits improve

Bonds from Latin America staged a mini-rally on Thursday, a New York-based trader said.

Brazil-based Vale SA's 2022s and Petroleo Brasileiro SA's (Petrobras) 2023s tightened as much as 20 bps on Thursday.

"And we watching most of the off-the-run credits re-price a few points higher without trading," he said. "Still hard to call it a true rally when clients are still selling, although we did see a markedly better mix of buys and sells."

Banco de Chile sells bonds

In its new deal, Banco de Chile SA priced CHF 125 million 1 1/8% notes due 2017 (Aa3) at 99.777 to yield 1.182%, or mid-swaps plus 60 bps, a market source said.

BNP Paribas and Deutsche Bank were the bookrunners for the deal.

Banco de Chile is based in Santiago.

Ziraat Bank deal ahead

Market-watchers were on the lookout for the upcoming issue of bonds from Turkey's Turkiye Cumhuriyeti Ziraat Bankasy AS (Ziraat Bank).

The Ankara-based lender is in the final stages of assembling the eurobond sale, a trader said.

BofA Merrill Lynch, Citigroup, Deutsche Bank, HSBC and JPMorgan are the bookrunners for the dollar-denominated offering of notes.

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