Russia's AHML, Turkey's Bankpozitif, Mexico's Grupo Cementos sell notes; mixed day for EM

By Christine Van Dusen

Atlanta, Feb. 1 - Russia's Agency for Housing Mortgage Lending OJSC (AHML), Turkey's Bankpozitif Kredi ve Kalkinma Bankasi AS and Mexico's Grupo Cementos de Chihuahua SAB de CV (GCC) issued notes on a Friday that saw "wild gyrations" in the secondary market, particularly for assets from the Middle East.

"Fridays are never hugely active in this part of the world, with a lot of locals out, and as such we saw some wild gyrations and covers on trades," a London-based trader said. "Asia was once again sellers from the word 'go.'"

Spreads started Friday a touch wider, with the Markit iTraxx SovX index spread moving out 1 basis point and the corporate index widening 2 bps.

"I am seeing a few accounts looking at this pullback as an opportunity to add to positions, but also others are taking chips off the table," a trader said. "Spreads are trying to find their feet into the close. However, this week has, net-net, seen bid and offers widen and seen many dealers take a backseat and seen spreads nicely pull back."

In trading, several of the recent issues from the Middle East, including notes from Dubai, managed to perform well. But many Latin American names suffered in the secondary market, a New York-based trader said.

"Pitiful end to a month that started out well," he said. "This brought dealers and accounts alike to the realization that this downtrade is not only for real, but is setting up for a complete shift in the range for Latin American corporate spreads."

In other news, emerging markets bond funds saw inflows of $1.53 billion this week, according to data-tracker EPFR Global.

"Flows are strongly favoring local-currency funds," said Cameron Brandt, director of research with EPFR.

Last week, the emerging markets bond funds saw $1.33 billion in inflows.

"Emerging markets bond funds took in over $1 billion for the fifth straight week," EPFR said in a report.

Gazprom notes widen

In other trading on Friday, the recent issue of notes from Russian global energy company OJSC Gazprom moved wider, a trader said.

The deal included $800 million 3.85% notes due in 2020 that priced to yield 3.85% and $900 million 4.95% notes due in 2028 that priced to yield 4.95%.

BNP Paribas, Gazprombank and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

"The new Gazprom issues are opening 4 bps to 6 bps wider and Russian corporates marked wider with the overall EM tone," a London-based analyst said. "Moves are being accentuated by an illiquid Friday morning ahead of payrolls."

ADIB trades up

Abu Dhabi Islamic Bank's recent $1 billion issue of 6 3/8% perpetual Islamic bonds that priced at par were seen Friday at 102¾ bid, 103¾ offered, a trader said.

Abu Dhabi Islamic Bank, HSBC, Morgan Stanley, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Regulation S-only sukuk.

"Good action in ADIB perpetuals today, with differing views regarding value and technicals on this one," he said.

The notes closed Friday at 103.12 bid, 103.87 offered, he said.

Emirates bonds dip

Looking at the new issue of notes priced by Dubai's Emirates Airline, the notes opened Friday in the mid- to high-99s after pricing at 99.94.

As the session went on, the notes moved down to 98¼ before closing at 98.65 on the bid side.

"The Emirates Airline deal that priced late last night is down over a point and liquidity is thin," the London analyst said.

The $750 million issue of 4½% amortizing notes due 2025 priced at a spread of mid-swaps plus 300 bps via Citigroup, Standard Chartered, Deutsche Bank, JPMorgan, Emirates NBD and Morgan Stanley in a Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes.

Dubai bonds see support

Also from the Middle East, some support was seen for bonds from Dubai, the analyst said.

"However, the overall market is well offered," the London analyst said.

Said a trader, "Flow was actually balanced today."

Qatar's 2023 notes were 4 bps wider on the week, at 102¾ bid, 103¼ offered.

Africa trading choppy

From Africa, trading was "very choppy and tricky pricing up corporates and financials," a trader said.

Senegal traded 118, about 30 bps wider on the week. Angola closed at 112 mid.

"Zambia is still holding fairly well at 102½ mid," he said. "Egypt is still well offered."

Ukraine bonds weaken

From Ukraine, bonds remained under pressure, said Svitlana Rusakova of Dragon Capital.

"Not a capitulation really, as the move was off highs, but at one point the long end of the curve was about 2 points down," she said.

The sovereign's 2021s were quoted as low as 105½ after trading as high as 107½ earlier in the week.

"It is hard to pinpoint a particular reason," she said. "Rumors about new issuance, adjustment in line with other EMs, some weak macro data may all have contributed. But these same reasons were happily ignored just 36 hours ago."

Corporate bonds continued to move lower, with Oschadbank printing at 97¾ bid, 99 offered.

"Some investors [are] looking to pick up bonds on the cheap," she said.

AHML prices notes

In its new deal, Russia-based mortgage loan provider AHML priced a RUB 15 billion issue of 7¾% notes due Feb. 13, 2018 at par to yield 7¾%, a market source said.

Citigroup, Deutsche Bank, Raiffeisen and VTB Bank were the bookrunners for the Rule 144A and Regulation S deal.

And Turkish lender Bankpozitif printed a $150 million issue of 5% notes due Feb. 7, 2018 at par to yield 5%, a market source said.

Citigroup and RBS were the bookrunners for the Regulation S-only deal.

Grupo Cementos prints bonds

Mexico-based construction materials company GCC sold $260 million 8 1/8% notes due Feb. 8, 2020 at par to yield 8 1/8%, a market source said.

BBVA, Citigroup and Scotia Capital were the bookrunners for the Rule 144A and Regulation S deal.

The notes closed at 103.40 bid, 103.80 offered, the New York-based trader said.

"They went as high as 103¾ with little actual Street buying to speak of, which made the last one-point swing higher even more impressive," he said. "The paper got bid up by what looked to be a few large local private wealth accounts and was able to hold its bid after those accounts seemed to buy bonds between 103½ and 104."

Cementos Pacasmayo roadshow

Peru-based cement company Cementos Pacasmayo SAA is planning a roadshow for an offering of up to $300 million in notes, a market source said.

The proceeds from the Rule 144A and Regulation S deal will be used to prepaying existing debt and for capital expenditures, according to a company announcement.

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