China's Citic Pacific prints notes; trading hectic; Cyprus remains on market's mind

By Christine Van Dusen

Atlanta, March 27 - Trading was fast-paced on Wednesday and China-based conglomerate Citic Pacific Ltd. sold notes as other emerging markets issuers took a breather, following the previous day's slew of new issues.

Meanwhile, investors and issuers alike remained concerned about financially troubled Cyprus and the news that a European Union leader did not regret his comments about using a levy on depositors as a template for future banking rescues.

"The market is still receiving confusing messages from leaders regarding the bailout of Cyprus banks," a London-based analyst said.

This led Russia-based lender Vnesheconombank (VEB) to postpone a Regulation S issue of Swiss franc-denominated notes via BNP Paribas and UBS.

Russian depositors stand to lose as much as $2 billion if a levy on deposits is imposed as a means to bailout Cyprus' banking system.

The Markit iTraxx SovX CEEMEA ex-EU index was nearly flat on Wednesday at Treasuries plus 207 basis points. The corporate index was unchanged at 240 bps over Treasuries.

"Very active day," a London-based trader said. "There were some pockets of outperformance."

He pointed Saudi Electricity Co.'s new issue of 10- and 30-year notes that both priced at par via Deutsche Bank and HSBC in a Rule 144A and Regulation S deal.

"That performed fairly well, given the backdrop," he said. "At 8 a.m. the 2043s went through at 101 in fair size before sellers emerged, pushing the bond down to 100 1/8."

The notes closed at 100¼ bid, 100½ offered while the 2023s closed at 1001/2.

"Saw some demand on the 2022s as well as the day wore on," he said. "These traded at 107 earlier in the week, closing at 107¼ bid, 107.45 offered."

Lat-Am bonds widen

From Latin America, corporate credits struggled on Wednesday, with spreads widening as much as 10 bps in some cases.

Brazil's Vale SA and Petroleo Brasileiro SA (Petrobras) moved out in trading and saw some selling, a New York-based trader said.

"But bids have remained close to yesterday's close," he said. "Recent new issues are still wrapped around their fixed re-offers."

One exception was Banco de Credito del Peru's (BCP) new issue of 4¼% 2023 notes, which priced at 99.196 via Citigroup and JPMorgan in a Rule 144A and Regulation S deal.

"They're up a half-point," the New York-based trader said.

Colombian notes suffer

Corporate bonds from Colombia have been suffering in trading, with Wednesday marking the seventh time in seven days that the notes have closed lower.

Meanwhile, market sources were whispering that Brazil's OSX Brasil SA may postpone its $265 million issue of notes June 26, 2014.

"Been a pretty tricky month, all told," the London trader said.

Ukraine still under pressure

In other trading, Ukraine's sovereign curve remained under pressure, said Svitlana Rusakova of Dragon Capital.

That was particularly true for the long end of the curve, with the 2017s through 2022s losing ground.

And corporate bonds, like the recent 8 7/8% notes due 2018 that JSC State Savings Bank of Ukraine (Oschadbank) priced at par, dipped in trading on Wednesday.

"Though Oschadbank is in relative demand on valuation," she said.

Yapi Kredi, Isbank see buying

From the Turkish banking sector, some small buying was noted for Turkey's Yapi ve Kredi Bankasi AS (Yapi Kredi) following the sale of the company's insurance unit.

"Also seeing some buying of Isbank," Rusakova said.

Perpetual notes from Russia's OAO Gazprom were also stronger on Wednesday, she added.

TMK trades below reoffer

Russia-based steel pipe manufacturer OAO TMK's new seven-year notes that were issued at a 6¾% yield were trading below reoffer at 99 1/8 on Wednesday, the analyst said.

"Although we view the existing 2018s to be at fair value, we see the new '20s to offer value at current levels and at a cash price below par," she said. "We remain constructive on the credit as we see the market dynamics to be supportive of its performance this year with the planned building of pipelines and solid oil process supporting demand."

Perpetuals remain in favor

Recent perpetual notes were well bid for most of Wednesday session, the London trader said.

"The DIBs were last lifted at 100.70," he said. "For the ADIBs, there were a few people scrambling for bonds near 105. Solid effort."

And the recent issue of 2023 notes from Abu Dhabi Commercial Bank saw better buyers from private banks.

"I think the touch on them is 102.10 bid, 102.35 offered,"

Some better buyers for NBD

The new issue of notes from Emirates NBD moved to 99.60 on Wednesday.

"Still struggling somewhat," a trader said. "But again, we see better buyers from the private banking-type accounts, so once the loose bonds are soaked up, this one may even get back to reoffer."

Investors weren't particularly interested in Emirates airline's new 2023s and 2025s, he said.

"Clearly very poorly placed," he said. "Even in the past 24 hours we've seen a lot of 2016s come out. The credit is a good 15 bps to 20 bps wider on the week."

Middle East in focus

Aldar Properties performed fairly well in trading on Wednesday, the London trader said.

"Traded at 107 3/8 at the low point this week," he said. "It's closing wrapped around 108 today."

Some buying was reported for names like National Bank of Abu Dhabi and Qatar National Bank.

"Still a tricky and technical market out there," he said.

Citic Pacific sells notes

In its new deal, China-based conglomerate Citic Pacific Ltd. sold $500 million 6 3/8% notes due April 10, 2020 at par to yield 6 3/8%, a market source said.

Citic Securities, HSBC and UBS were the bookrunners for the Regulation S deal.

BOCI and Standard Chartered were joint leads.

And Turkey-based bottler Coca-Cola Icecek AS set the size at €300 million for its upcoming issue of eurobonds with RBS and Citigroup.

Mriya Agro mandates banks

Ukraine-based agricultural business Mriya Agro Holding Public Ltd. has mandated Citigroup, Credit Suisse, Goldman Sachs and Sberbank as bookrunners for a dollar-denominated issue of notes that will be marketed during a roadshow, a market source said.

The roadshow will start April 3 and take place in Asia, Europe and the United States.

A Rule 144A and Regulation S transaction is expected to follow.

Sunac China picks leads

Wednesday also saw residential and commercial property developer Sunac China Holdings Ltd. tap HSBC, BOCI International, Citigroup, ICBC (Asia), ICBCI Capital and Morgan Stanley for an issue of dollar-denominated notes, according to a company filing.

Proceeds from the Regulation S deal will be used to refinance debt and for general corporate purposes.

Chilean issue oversubscribed

The final book for chemical company Sociedad Quimica y Minera de Chile's new $300 million issue of 3 5/8% notes due April 3, 2023 was $2.1 billion from more than 130 accounts, a market source said.

The notes priced at 99.246 to yield Treasuries plus 180 bps with bookrunners BofA Merrill Lynch, JPMorgan and Scotiabank in a Rule 144A and Regulation S deal.

About 86% of the orders came from the United States, 1% from Latin America and 13% from Europe, the Middle East and North Africa.

Asset managers picked up 59%, insurance 28%, pension funds 5%, private banks 4% and hedge funds 3%.

Bharti Airtel brings in orders

The new tap of the 5 1/8% notes due 2023 from India-based telecommunications company Bharti Airtel Ltd. drew about $2 billion in orders, according to a company announcement.

About 50% of the notes were distributed in the United States, 32% in Europe and 18% in Asia.

"The bonds of Bharti Airtel witnessed a strong rally in the secondary market," the company said. "The transaction is the first tap issuance out of India this year."

Barclays, BNP Paribas, Citigroup, Deutsche Bank, HSBC, Standard Chartered Bank and UBS were the bookrunners for the Rule 144A and Regulation S deal.

The original $1 billion issue priced earlier in March at par to yield Treasuries plus 324 bps.

The proceeds were used to repay and refinance existing foreign currency indebtedness and for general corporate purposes.

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