Korea's Doosan Infracore, China's Citic print notes on mixed but stable day for EM assets

By Christine Van Dusen

Atlanta, Sept. 25 - Korea's Doosan Infracore Co. Ltd. and China's Citic Bank priced notes on a mostly stable, balanced Tuesday for emerging markets assets, even as the economic outlook for Greece weakened and Spain's cost of borrowing climbed.

The day also saw deals being planned by Abu Dhabi-based First Gulf Bank, Moscow-based JSC Russian Standard Bank and Panamanian issuers Global Bank and ENA Norte Trust.

"Market sentiment remains sensitive to weak European Union growth and worries about whether Spain will accept conditionality in exchange for European Central Bank and European Stability Mechanism support," according to a report from Barclays.

But during the past six or seven sessions, emerging markets activity has been more balanced, a trader said.

"There have definitely been some chips taken off the table, and the spread moves reflect that. Whether some smarter accounts have had the tap on the shoulder with supply around the corner, or whether they are just lightening up after the Treasury moves this year, only time will tell. But a bit more value has been thrown into the mix."

Though the primary market wasn't going like gangbusters on Tuesday, issuance continues at a healthy clip, according to a report from Erste Group Research.

"The past two weeks have recorded the highest issue volumes on the euro corporate bond market in the year to date," the report said. "However, the secondary market performance is still tepid."

Corporate bonds from emerging markets have been undergoing consolidation, the report said.

"But generally speaking, the credit markets have been stable," the report said. "The bonds issued in the peripheral countries of the euro zone also benefited from the favorable international environment and thus posted declining yields."

IPIC gets attention

Trading, overall, was a "mixed bag" on Tuesday, a London-based trader said.

"The bulk of activity here is focused on International Petroleum Investment Co., where the curve trades heavy on the 2017s and 2020s but is reasonably well bid on the 2016s, 2021s, 2022s and 2041s," he said.

The 2041s saw buyers on Tuesday and closed 25 basis points tighter on the month, he said.

Looking at bonds from Dubai, corporate issuer Emaar Properties saw its 2019s close at 105.75 on the bid side, well supported, he said.

"Majid al Futtaim is struggling a little, at 15 to 25 bps wider on the week," he said. "Some retail investor nibbling on Dubai Holding's 2014s."

Middle East, Africa in focus

In other trading from the Middle East, Qatar's 2023 closed 6 bps tighter at about 102 while RasGas' 2019s were popular on Tuesday, a trader said.

"Bahrain's 2022 continues to trade a little heavy, clearing between 106.12 and 106.37 today," he said.

From Africa, Angola printed with a 110 handle.

"Angola goes to the top of the class," he said. "Still feels like there's a bit of paper around in Zambia and perhaps a few people lightening up on Gabon, Ghana and Senegal."

South Africa's five-year credit default swaps were seen Tuesday at 143 bid, 148 offered. And the sovereign's bonds closed tighter as U.S. Treasuries moved lower.

Ukraine bonds widen

Looking to Ukraine, sovereign eurobonds have been moving wider even after news that National Bank of Ukraine is likely to renew cooperation with the International Monetary Fund as soon as this year, said Svitlana Rusakova of Dragon Capital.

"The long end of the sovereign curve got hit a few times but prices stabilized," she said.

The sovereign's 2017s have lost about 3/4-point this week, trading at about 105.75 bid, 106.75 offered.

The 2020s were quoted about a point lower at 99.75 bid, 100.75 offered, and the 2021s were seen at 100.25 bid, 101.25 offered, about 1½ points lower.

"Oschadbank saw some selling pressure," she said, noting that its notes fell to 96.75 bid, 97.37 offered. "Other corporate names did not move much."

Doosan Infracore does deal

In its new deal, Korean conglomerate Doosan Infracore priced a $500 million issue of 3¼% notes due 2042 at 99.643 to yield 3.328%, or Treasuries plus 265 bps, a market source said.

The notes were talked at the Treasuries plus 270 bps area.

Citigroup, JPMorgan and Korea Development Bank were the bookrunners for the Regulation S-only deal.

And Hong Kong-based Citic Bank priced RMB 500 million 3.65% notes due 2014 at 99.904 to yield 3.7% via RBS and ICBC Asia in a Regulation S deal.

Proceeds will be used for general corporate purposes.

BTG oversubscribed

Brazilian lender Banco BTG Pactual's issue of 359.84 billion 7% Colombian peso notes - priced at par - was two-times oversubscribed, a market source said.

About 88% of the orders came from Latin America.

BTG Pactual, Celfin Capital and Deutsche Bank were the bookrunners for the Regulation S-only deal.

Also oversubscribed was the recent $500 million add-on to Mexico-based BBVA Bancomer's existing $1 billion issue of 6¾% subordinated tier II notes due 2022, which priced at 109.89 to yield 5.45%.

The original issue priced at 99.97 to yield 6¾%.

Proceeds will be used to strengthen the company's capital structure and for general corporate purposes.

The final book was about $1.5 billion from about 105 investors, a market source said.

ENA, First Gulf ahead

In other deal-related news, Panama-based toll road operator ENA Norte Trust gave initial price guidance in the low 5% for its planned $600 million issue of notes due July 2023, a market source said.

HSBC and Global Bank are the bookrunners for the Rule 144A and Regulation S deal, which was marketed on a roadshow that ended Sept. 20.

Proceeds will be used to purchase the Corredor Norte highway in Panama.

Abu Dhabi-based First Gulf Bank mandated Citigroup, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered for a dollar-denominated issue of benchmark-sized bonds that could price by Friday.

Two lenders tap bookrunners

Russian Standard Bank mandated Goldman Sachs, UBS and VTB Capital for a roadshow starting Sept. 27 for an issue of dollar notes, a market source said.

The roadshow for the Rule 144A and Regulation S deal will take place in Europe and the United States.

And Panama's Global Bank mandated Deutsche Bank and HSBC to market a dollar-denominated issue of notes during a roadshow, a market source said.

In May, the issuer pulled a $200 million five-year issue of notes via Deutsche Bank.

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