Korea's Kexim sells bonds; EM corporate spreads widen; Russia, Turkey bonds rebound

By Christine Van Dusen

Atlanta, March 15 - Export Import Bank of Korea (Kexim) priced a sterling-denominated issue of notes on a Friday that saw a rebound in benchmark sovereign bonds from Russia and Turkey on the back of a bounce in U.S. Treasuries.

The Markit iTraxx SovX index spread finished the week at Treasuries plus 170 basis points, unchanged from Thursday. The corporate index was quoted Friday at 213 bps over Treasuries, wider by 4 bps.

The 2041 notes from Turkey were up at 113.25, a London-based analyst said, with strength shown by the sovereign's euro curve. And Russia's 2030s were up at 123.75.

On the corporate side, the recent euro notes that OAO Gazprom priced at par traded Friday at 100.75. Small buying was noted for Rosneft's 2022s and bonds from OAO Sberbank and OJSC PhosAgro.

Investors also focused on the recent issues from Dubai Islamic Bank PJSC and Emirates airline.

DIB's $1 billion issue of 6¼% perpetual notes priced this week at par to yield 6¼% via Dubai Islamic Bank, Emirates NBD Capital, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S sukuk.

"Activity yesterday was centered around the new DIB, which after reaching 100.65 sold off and is currently at par bid, 100.20 offered," a trader said.

Emirates sold $1 billion 3 7/8% notes due 2023 at 99.331 to yield 4.024%, or mid-swaps plus 300 bps.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD Capital and Standard Chartered Bank were the bookrunners for the Regulation S-only sukuk.

"Emirates' 2023 feels poorly placed, with plenty of loose bonds around, currently at 98½ bid, 99 offered," the analyst said.

Overall, trading volumes were somewhat thin, as is often the case on a Friday.

"Slow start," she said. "Activity is light."

India, Thailand draw inflows

In other news, emerging markets bond funds saw $569 million in inflows for the week ended March 13, according to a report from data tracker EPFR Global.

Local-currency funds took in $768 million while hard-currency funds saw outflows of $232 million.

"In Asia, India and Thailand stood out as large recipients of capital inflows from abroad," said Nick Chamie, head of emerging markets research for RBC Capital Markets. "Meanwhile, foreigners seem to be losing interest in Hungarian bonds."

Kexim prices notes

For its new deal, Korea's Kexim sold £300 million notes due March 22, 2016 at par to yield Libor plus 70 bps, in line with talk.

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

This followed the late-Thursday pricing of Mexico-based building materials supplier and cement producer Cemex SAB de CV's $600 million issue of 5 7/8% notes due March 25, 2019.

The notes came to the market at par to yield 5 7/8%, or Treasuries plus 500.2 bps with BofA Merrill Lynch, Citigroup, HSBC and Santander in a Rule 144A and Regulation S deal.

The proceeds will be used to refinance existing debt and for general corporate purposes.

Some selling for Oschadbank

The secondary market saw some selling of the new issue of notes due 2018 from JSC State Savings Bank of Ukraine (Oschadbank), said Svitlana Rusakova of Dragon Capital.

The lender priced a $500 million issue of 8 7/8% notes due March 20, 2018 at par to yield 8 7/8%, or mid-swaps plus 785 bps, in line with talk.

"At one point we saw someone sending the market to as low as 99 or 99.50, but it seems not much actually traded below 99.50," she said. "The bonds bounced back as sovereigns were lifted, likely on the announcement of an IMF mission visit, ending the day around par."

Credit Suisse, Deutsche Bank and JPMorgan were the bookrunners for the Regulation S deal.

Arcelik in focus

The London analyst was keeping an eye on the upcoming issue of notes from Turkey-based household appliances manufacturer Arcelik AS.

The company has mandated BofA Merrill Lynch, JPMorgan and RBS for a Rule 144A and Regulation S deal.

"Arcelik is a leading blue-chip corporate in the white goods segment and is thus exposed to cyclical consumer demand," she said. "The credit has permission from authorities to issue up to $1 billion in eurobonds."

A roadshow will begin on March 18 and travel through Europe and the United States.

TMK plans notes

Russia-based pipe manufacturer OAO TMK is planning to issue notes next month, a market source said.

No other details on the deal were immediately available on Friday.

"Liquidity is somewhat stretched," the London-based analyst said. "Although TMK has exceeded its incurrence covenant, the company is free to borrow to refinance and has a high degree of flexibility."

Energa deal oversubscribed

The final book for Poland-based energy company Energa's new €500 million 3¼% notes due March 19, 2020 was €3.5 billion from 250 orders, a market source said.

The notes priced at 99.704 to yield 3.298%, or mid-swaps plus 200 bps via BofA Merrill Lynch, BNP Paribas and HSBC in a Regulation S deal.

About 28% of the orders came from Germany and Austria, 27% from the United Kingdom, 21% from other European countries, 18% from France, 5% from Poland and 1% from others.

Asset managers picked up 62%, insurers and pensions 29%, banks 6% and hedge funds 3%.

In trading, the notes moved as high as 102 on Friday.

Bank of India attracts orders

Also oversubscribed was the recent $500 million 3 5/8% notes due 2018 from Bank of India.

The final book was $2.7 billion from 190 investors, with 46% from Asia, 37% from the United States and 17% from Europe.

Fund and asset managers accounted for 55%, banks 27%, private banks 11% and public institutions and insurers 7%.

The notes priced at a spread of Treasuries plus 280 bps, at the tight end of talk.

Barclays, BofA Merrill Lynch, Citigroup, HSBC, Deutsche Bank and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

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