Serbia, Korea Finance, ENA Norte, Sarawak sell notes on firmer day for EM; spreads tighten

By Christine Van Dusen

Atlanta, Sept. 27 - Singapore's BOC Aviation, Korea Finance Corp., China Resources Cement Holdings Ltd., the Malaysian State of Sarawak, Panama's ENA Norte Trust and Serbia priced notes on a fairly stable Thursday for emerging markets assets, even as sentiment was tested by the continuing protests in Spain and Greece's upcoming spending cuts.

"All told, firmer this morning," a trader said.

Many emerging markets names - particularly from the Asia-Pacific region and Europe - were relatively well bid, according to a report from Barclays.

"Current market anxiety related to Spain notwithstanding, we think the Fed and the European Central Bank are sending markets a 'buy risk' signal as they set incentives for investors to move along the risk spectrum," the report said.

The Markit iTraxx SovX index spread was seen at Treasuries plus 218 basis points, about 7 bps tighter.

The anxiety in the air had the biggest impact on credit default swaps, especially from Central and Eastern Europe, according to a report from Erste Group Research.

"Sovereign CDS widened across the board," the report said.

But overall, the market was better for emerging markets assets, a London-based trader said.

Dubai Electricity and Water Authority's 2020s were tighter by 15 bps, and the Dubai sovereign saw its bonds narrow by as much as 15 bps. Bahrain's 2022s were 2 bps tighter, he said. Qatar's long end was 3 bps to 6 bps tighter. "Good interest on the Qatar 2023 sukuk, last printing at 102.65, 8 bps tighter," he said. "Front-end Qatar sovereign remains a rock."

A few buyers were seen for Tamweel's 2017s, trading at about 104 3/8 bid, 104 7/8 offered.

"Someone lost Qtel International 2021s yesterday," the trader added. "This one again has resumed its firm bid, now 10 bps better on the day."

Long-end Abu Dhabi paper was in demand, and International Petroleum Investment Co. (IPIC)'s 2041s were trading with a 132 handle amid interest from Asian investors.

"It still does feel like the Street is long on IPIC 2017 and 2020 and perhaps even 2022, despite some decent take-out on the latter recently," the London trader said. "The 2016s and 2041s are still very popular."

Long notes see buyers

Also from the Middle East, notes from Ras al Khaimah weren't very liquid, but they traded well, a trader said.

The 2014s were seen at 110.50 bid, 111.50 offered, while the 2016s were quoted at 109 bid 110 offered.

Meanwhile, Abu Dhabi National Energy Co. (TAQA)'s 2036s saw buyers.

"The buyers are ongoing on the few long-dated liquid Gulf region assets out there," he said.

From Africa, sovereigns saw some two-way activity on Thursday, he said.

"The space did have a superb run, let's not forget," he said. "It's all a little quiet, but certainly there are a few more sellers around than two to three weeks ago."

South Africa downgraded

South Africa was downgraded from A3 to Baa1 by Moody's Investors Service.

"Their 2022s are still only 20 bps north of Qatar's 2022s," a trader said.

The 2017 notes from South African financial services company Investec Ltd. - priced on July 16 at par - started the day at 98 bid, 99 offered, a trader said.

As the session went on, the notes were quoted at 98 bid, 98¾ offered.

"There's still retail investor nibbling," he said.

HSBC, ING, Investec, RBS and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Ukraine bonds lose ground

In other trading on Thursday, eurobonds from Ukraine were weighed down by concern about the European Union, said Svitlana Rusakova of Dragon Capital.

The notes continued to lose ground, particularly on the long end, with the 2020s recently slipping to 99 bid, par offered. The sovereign's 2021s were quoted this week at par bid, 101 offered.

"However, cheap offers got lifted a few times," she said.

Meanwhile, quasi-sovereign Naftogaz was seen at 101 bid, 102 offered.

"Oschadbank remained under selling pressure," she said, noting that a large buyer was out of the market, causing the bonds to lose more than a point.

"Other names stood quiet, reflecting the prevailing wait-and-see mode," she said.

In trading from Russia, long-dated bonds were lifted into the close, finishing about 4 bps to 6 bps tighter, a trader said.

BOC Aviation sells bonds

In its new deal, Singapore-based aircraft leasing company BOC Aviation sold $500 million 2 7/8% notes due 2017 at 99.525 to yield 2.978%, or Treasuries plus 235 bps, a market source said.

BOCI, Citigroup and HSBC were the bookrunners for the Regulation S notes.

And Hong Kong-based China Resources Cement Holdings sold $400 million 2 1/8% notes due 2017 at 99.75 to yield 2.178%, or Treasuries plus 155 bps, via DBS in a Regulation S deal.

Sarawak does deal

The Malaysian State of Sarawak priced an $800 million issue of 4¼% notes due 2022 at 98.996 to yield Treasuries plus 273 bps with Goldman Sachs in a Regulation S transaction.

Proceeds will be used to subscribe to all the shares in a restricted subsidiary called SSG Capital Resources Sdn. Bhd., according to a news release from Standard & Poor's. The funds will then be made available to the state government for infrastructure projects and development of the biotechnology sector.

The issuer was SSG Resources Ltd., a special-purpose company established in Labuan, Malaysia.

"This shows there's still demand and interest out there, as we head into October," a trader said.

Korea Finance sells more

Korea Finance priced a two-tranche issue of CHF 250 million notes due 2015 and 2018 with bookrunners Credit Suisse and UBS.

The transaction included CHF 150 million 1% notes due 2018 that priced at 100.267 and CHF 100 million notes due 2015 that priced at par to yield Libor plus 50 bps.

The Seoul, South Korea-based company recently priced a $300 million add-on to its 2¼% five-year notes at 101.432 to yield Treasuries plus 123 bps.

ENA Norte prints notes

In another new deal, Panama-based toll-road operator ENA Norte Trust priced a $600 million issue of 4.95% notes due 2023 at par to yield 4.95%, a market source said.

The notes priced in line with talk, set at the low 5% area.

HSBC and Global Bank were the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used to purchase the Corredor Norte highway.

And Serbia priced a $1 billion add-on to its 7¼% notes due 2021 at 104.179 to yield 6 5/8%, or Treasuries plus 497.4 bps via Deutsche Bank and JPMorgan in a Rule 144A and Regulation S deal.

Lenders give guidance

In other deal-related news, Panama's Global Bank set talk at the 5% to 5 1/8% area for its planned $200 million issue of five-year notes, a market source said.

Deutsche Bank and HSBC are the bookrunners for the deal.

Kazakhstan's Eurasian Development Bank gave guidance in the 8 3/8% area for its RUB 5 billion issue of five-year notes.

RBI and Sberbank CIB are the bookrunners for the Regulation S-only deal.

And Banco ABC Brasil set talk at the 105 area for a $100 million tap of its existing 7 7/8% notes due 2020 with HSBC, Itau Unibanco and Santander in a Rule 144A and Regulation S deal.

Agrokor sets price talk

Also setting price talk on Thursday was Croatia-based food products company Agrokor DD and its dual-currency offer of seven-year notes.

A $300 million tranche was talked with a yield in the 9% area, and a €250 million tranche was talked with a yield in the 9¼% area.

Pricing on the Rule 144A and Regulation S deal, with bookrunners BNP Paribas, JPMorgan and UnicCredit, is set for Friday.

Bulgaria's Corporate Commercial Bank AD plans to issue dollar-denominated notes due 2014, a market source said.

VTB is the bookrunner for the Regulation S deal, issued through special-purpose vehicle Northern Lights Bulgaria NV.

Belarus, Severstal deals ahead

Belarus plans to issue up to $600 million in notes in 2013, a market source said.

The transaction will be marketed to investors in Asia and Europe.

Russian steel and mining company OAO Severstal has picked Citigroup, ING, JPMorgan and VTB Bank to lead and market a dollar-denominated issue of notes, a market source said.

A roadshow for the Rule 144A and Regulation S deal will be held in the United States and Europe, starting Oct. 1.

Korean deal oversubscribed

In other news, Seoul-based Industrial Bank of Korea's new $300 million issue of 1 3/8% notes due 2015 was more than four times oversubscribed, a market source said.

The notes priced at 99.649 to yield 1.495%, or Treasuries plus 115 bps, via Deutsche Bank and Standard Chartered in a Rule 144A and Regulation S deal.

About 75 accounts were involved, with 50% from Asia, 34% from the United States and 16% from Europe.

Asset managers accounted for 60%, banks 26%, central banks 10% and private banks 4%.

Paul A. Harris contributed to this article.

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