New issues from Sabic, China Construction Bank; BOC Aviation, Ping An Insurance set talk

By Christine Van Dusen

Atlanta, Nov. 13 - Saudi Arabia's Saudi Basic Industries Corp. (Sabic) and China Construction Bank Corp. sold notes as emerging markets bonds saw better bids, balanced flows and slightly wider spreads.

"A shade over 2¾% on the 10-year Treasury has seen some slightly better bids returning to this market," a trader said. "It seems a pretty balanced market, flow-wise, but one has to pick one's spots and bonds because technicals are very apparent and will be even more exaggerated into year-end."

The Markit iTraxx SovX CEEME ex-EU index spread on Wednesday opened at 238 basis points over Treasuries, 1 bp wider than on Tuesday. The corporate index, seen Tuesday at 262 bps over Treasuries, was also wider by one on Wednesday.

In trading on Wednesday, International Petroleum Investment Co. (IPIC)'s euro-denominated notes continued to fare well, a London-based trader said.

"Elsewhere, perpetuals are bid today, especially Dubai Islamic Bank and Abu Dhabi Islamic Bank," he said.

Dubai Islamic Bank's perpetuals, which priced at par, traded Wednesday at 94¾ bid, 95½ offered while Abu Dhabi Islamic Bank's perpetuals moved to 97¾ bid, 98½ offered after also pricing at par.

"A pretty technical market," the London trader said. "For some bonds, the Street is only a buyer. Of course, on others, only a seller."

In other trading on Wednesday, buyers emerged for Turkish banking bonds, particularly those from Turkiye Vakiflar Bankasi TAO (Vakifbank) and Yapi ve Kredi Bankasi AS (YapiKredi), a London-based analyst said.

Better bids were also seen for Russian banks like OJSC VTB Bank and the perpetual notes from Gazprombank OJSC.

"An overall slightly better tone to the market," she said.

PDVSA trades up

Bonds from Venezuela's PDVSA SA were up on Wednesday on the news that the oil company would sell $4.5 billion of notes in a private offering, a market source said.

The company's 5 3/8% notes due in 2027 were up a ½ point to 53, while the 9¾% notes due 2035 were up 2½ points to 693/4.

The 5¼% 2017 notes were up "almost a point," to 721/4, the trader said.

ADCB notes trade

The new notes from Abu Dhabi Commercial Bank PJSC - $500 million floating-rate notes due 2017 that priced at par - opened Wednesday at 99.90 bid, 100.15 offered.

Deutsche Bank, JPMorgan and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Later during the European morning, the notes moved to 99 7/8 bid, 100 1/8 offered.

"Very solid effort," a trader said. "It doesn't feel like there are too many loose bonds flying around."

Meanwhile, the company's 2023s were trading as much as 15 bps wider on the day, a trader said.

Ukraine in focus

Bonds from Ukraine have been weaker so far this week, said Svitlana Rusakova of Dragon Capital.

"Ukraine-specific worries were compounded by general EM weakness," she said. "Quotes retreated by 1 point to 1½ points, then several low offers got lifted."

Still, by mid-week the bonds were closing with "an overall heavy tone," she said.

Sellers emerged for corporates but buyers were hard to find, she said.

OJSC Oschadbank, however, saw "bottom-fishing bids," she said.

Sabic prices notes

Saudi Arabia-based chemicals and metals manufacturer Sabic priced €750 million 2¾% notes due 2020 at 99.28 to yield mid-swaps plus 135 bps, a syndicate source said.

The notes were initially talked at a spread in the 140 bps area before being tightened to 135 bps over Treasuries.

Credit Agricole, ING, JPMorgan, Mitsubishi UFJ and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The notes, issued by Sabic Capital IBV, opened at 99.40 bid, 99.80 offered on Wednesday and closed at 99.65 bid, 99.90 offered.

"There remains a clear lack of investment-grade euro paper in my space, so I'd expect this one to be popular with the big European funds," said a trader who focuses on the Middle East.

Chinese Bank sells bonds

In its new deal, China Construction Bank priced a A$300 million issue of floating-rate notes due on 2016 at par to yield 110 bps over the bank bill swap rate, a market source said.

ANZ, CBA, HSBC and Goldman Sachs were the bookrunners for the deal.

The lender is based in Beijing.

BOC Aviation sets talk

Singapore's BOC Aviation Pte. Ltd. set price talk in the 4.7% area for its upcoming issue of renminbi-denominated notes due in five years (/BBB-/A-), a market source said.

No other details were immediately available on Wednesday.

The notes will be issued under the company's $2 billion euro medium-term notes program.

The proceeds will be used for capital spending and general corporate purposes, according to Standard & Poor's.

BOC Aviation is a Singapore-based aircraft leasing company.

Ping An gives guidance

Ping An Insurance Group Co. of China set talk for a three-year issue of renminbi-denominated notes and a tap of its 4¾% renminbi notes due in five years, a market source said.

The three-year notes were talked at a yield in the 4.2% area.

The five-year tap was talked at a price in the 100.75 area.

No other details on the new deals were available on Wednesday.

The original five-year issue totaled RMB 1.8 billion and priced in October at par to yield 4¾% via BofA Merrill Lynch and HSBC in a Regulation S deal.

The issuer is based in Shekou, Shenzhen, China.

SapuraKencana eyes notes

Malaysia's SapuraKencana Bhd. is looking to issue dollar-denominated Islamic notes through a $2.2 billion and two-year bridge-to-sukuk bond, a market source said.

The deal would be part of a debt package designed to refinance debt and finance the purchase of Newfield Exploration Co.'s oil and gas assets in Malaysia.

The oilfield service provider is based in Kuala Lumpur.

And Bulgaria is looking to issue up to €1 billion of bonds during 2014, a market source said.

Stephanie N. Rotondo contributed to this article.

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