Chilean issuers, China Vanke sell notes; spreads mixed; more sellers than buyers for EM

By Christine Van Dusen

Atlanta, March 7 - Chile's Tanner Finanzas Corporativas, Banco Santander Chile and China Vanke Co. priced notes on a Thursday marked by solid activity amid uncertainty in Venezuela in the wake of President Hugo Chavez' death this week.

The day also saw several issuers take steps toward the market, including Brazil's Cosan SA, Oman's BankMuscat, Nigeria's Sea Trucks Group, Export-Import Bank of Korea (Kexim) and Ukraine's MHP.

"Activity was solid today, but probably not as busy as Tuesday and Wednesday," a London-based trader said. "Skewed to slightly better sellers."

The Markit iTraxx SovX index spread widened 1 basis point to 174 bps over Treasuries. The corporate index, at 222 bps spread on Wednesday, moved in 3 bps to 219 bps over Treasuries.

"Spreads are benefiting from the move to 1.985% on the 10-year Treasury," the London-based trader said. "Was a fairly solid morning of demand, with bank paper especially strong."

He pointed to Abu Dhabi Commercial Bank's recent 2023 notes, which moved 7 bps to 8 bps tighter on the day.

"However, we did see some paper come out on the Abu Dhabi Islamic Bank perpetuals, which were then pushed down in the Street to a low of 1041/2," he said. "Could see some choppy movement next week on this one as price talk and chatter emerges on the new Dubai Islamic Bank Regulation S perpetuals."

Latin America, and Venezuela in particular, remained in focus on Thursday as investors wondered if the post-Chavez government would follow the steps outlined in the country's constitution and whether the transition in leadership would disrupt oil prices.

Bonds from Venezuela "have limited room to perform," according to a report from Barclays.

PDVSA short end favored

The bank is recommending investors stay engaged in the short end of the bond curve for Petroleos de Venezuela's (PDVSA) 2014s and 2015s and Venezuela's 2014s.

Elsewhere in Latin America, the breadth of actively trading credits remained narrow, a New York-based trader said.

Turkish banks firm up

Meanwhile, corporate issues from Turkey opened firmer on Thursday, a London-based analyst said.

This was particularly true for such names as Turkiye Vakiflar Bankasi TAO (Vakifbank), and its 2022s.

"GarantiBank is seeing buyers, and is 2 bps to 3 bps tighter on the day," she said.

In Russia, buying was noted for OAO Sberbank's 6 1/8% 2022s while two-way activity was seen for the company's 5 1/8% 2022 notes.

Oschadbank popular, plans deal

From Ukraine, sovereign bonds took a small breather from their rally and saw some profit-taking, said Svitlana Rusakova of Dragon Capital.

Demand remained for corporates, particularly JSC State Savings Bank of Ukraine (Oschadbank), which has mandated bookrunners for a dollar-denominated issue of notes.

Credit Suisse, Deutsche Bank and JPMorgan are holding investor meetings on March 11 in London for the Regulation S deal.

The company's bond has been seen this week at 100½ bid, 101 offered and was lifted several times to 101½ bid, 102 offered, she said.

"But a few sellers put pressure on the quotes," she said.

MHP to issue notes

Also from Ukraine, poultry producer MHP is looking to issue up to $700 million of five-year notes this month, a market source said.

The proceeds will be used to refinance existing debt.

JPMorgan, Morgan Stanley and VTB are the bookrunners for the Rule 144A and Regulation S deal, according to a company statement.

The deal is expected to price on or near March 21.

Emirates ahead

Some market sources were keeping an eye on Emirates airline, which is on a roadshow ahead of an issue of Islamic bonds.

"When this deal launches they will have a 2016 dollar senior, a sukuk and a sinking longer-dated 2025 dollar bond out there, so there's something for everyone, really," the London trader said.

Dubai's 2043s were pushed lower on Thursday, moving to 96.

"The 2023 is trading just above par, having been 101 bid-side last week," he said. "Still seeing demand for Dubai Holding, Dar al Arkan."

Demand was also noted for Abu Dhabi National Energy Co. (TAQA).

"I cannot stress how solid this name is at the moment," he said.

Africa in focus

From Africa, Tanzania's recent issue - $600 million amortizing notes due 2020 that priced at par via Standard Bank in a Regulation S deal - continued to perform well in trading, a trader said.

"It ticks along, at 104.12 bid, 104.62 offered at the close," he said. "Zambia is again unchanged. Ghana went through just north of 116."

He also saw buyers for Senegal bonds, he said.

"Gabon is 50 bps better on the month and well supported," he said.

China Vanke does deal

In its new deal, real estate developer China Vanke priced an $800 million issue of 2 5/8% notes due March 13, 2018 at 99.397 to yield 2.755%, or Treasuries plus 199 bps, a market source said.

The notes were talked at a spread in the 200 bps area.

HSBC and Deutsche Bank were the active leads. Bank of China, DBS, UBS and JPMorgan were also joint bookrunners.

Tanner, Santander print bonds

In another new deal, Chile-based financial services company Tanner printed $250 million 4 3/8% notes due March 13, 2018 at 99.446 to yield Treasuries plus 369.9 bps after talk in the 4½% area.

BofA Merrill Lynch was the bookrunner for the Regulation S deal.

And Banco Santander Chile sold a CHF 150 million issue of notes due March 28, 2017 at par to yield Libor plus 100 bps with Deutsche Bank.

Cosan launches notes

Brazil-based bioethanol producer Cosan launched a two-tranche issue of dollar notes due in 2023 and Brazilian real-denominated notes due in 2018, a market source said.

A total of $500 million notes due in 2023 launched at a yield of 5.15% after talk in the 5½% area.

After receivable a favorable market response for the dollar notes, Cosan added a Brazilian real-denominated tranche. A total of BRL 500 million, the notes due 2018 launched at 9 5/8% after talk in the 9¾% area.

The notes will be payable in dollars.

Bradesco BBI, BTG Pactual, Itau BBA and Morgan Stanley are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to prepay indebtedness.

BankMuscat taps bookrunners

Oman's BankMuscat has mandated Citigroup, Credit Agricole CIB, Deutsche Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank as bookrunners for dollar notes that will be marketed during a roadshow, a market source said.

The marketing trip will begin March 12 and take place in the Middle East, Asia and Europe.

A Regulation S deal is expected to follow.

BankMuscat is a lender based in Muscat, Oman.

"Not much rated paper from Oman out there," a trader said. "So it should go well at the right price."

Sea Trucks plans notes

Nigeria-based oil and gas marine contractor Sea Trucks Group is planning up to $550 million of amortizing senior notes, with bookrunner Pareto Securities, that are expected to carry a final maturity of March 26, 2018, a market source said.

The proceeds will be used to prepay the company's outstanding $200 million convertible guaranteed bonds due in 2015, for capital expenditures and for general corporate purposes.

And Korea's Kexim has mandated Deutsche Bank and RBS for a roadshow to market a sterling-denominated issue of notes, a market source said.

Petron issue oversubscribed

The final book for Philippines-based oil refiner and marketer Petron Corp.'s recent $250 million increase of its 7½% perpetual notes was about $2.5 billion from more than 150 accounts, a market source said.

The Regulation S notes - with bookrunners Deutsche Bank, HSBC, Standard Chartered Bank and UBS - priced at 104.25 to yield 6.551%.

The proceeds will be used to fund capital expenditures and for general corporate purposes.

About 87% of the orders came from Asia and 13% from Europe.

Funds picked up 61%, banks 10%, private banks 27% and insurers 2%.

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