Qatar International Islamic's debut dollar deal well received; China's Longfor sells notes

By Christine Van Dusen

Atlanta, Oct. 11 - Qatar International Islamic Bank (QIIB) and China's Longfor Properties Co. Ltd. sold notes on a constructive Thursday as emerging markets investors largely shrugged off Spain's surprising credit downgrade and focused their buying on higher-yielding names.

"A move by a rating agency is clearly largely a given," a London-based trader said, "and is not a game-changer."

Investors instead turned their attentions to the Middle Eastern banking sector and the QIIB deal, as well as recent issues from First Gulf Bank PJSC and Qatar Islamic Bank.

"All told, the market has digested the recent bank deals," a trader said. "All three have ticked up, despite pricing coming in. I still think the market would welcome a non-financial deal."

Qatar Islamic Bank's $750 million 2½% notes due Oct. 10, 2017 that priced at par opened Thursday at par bid, 100.15 offered.

The recent 2017 notes from First Gulf Bank were trading early Thursday at 100.25 bid, 100.375 offered after pricing at par.

In its debut deal, Qatar International Islamic Bank, through special-purpose vehicle QIIB Sukuk Funding Ltd., priced $700 million 2.688% notes due Oct. 18, 2017 at par to yield 2.688%, or mid-swaps plus 190 basis points, a market source said.

The notes priced at the tight end of talk, set at mid-swaps plus 190 bps to 195 bps.

HSBC, Standard Chartered and QNB Capital were the bookrunners for the Regulation S deal.

Shortly after pricing, the notes were trading at 100.05 bid, 100.30 offered. Later in the session they moved to par bid, 100.25 offered.

And during the European afternoon the notes were quoted at a high of 100.20 bid, 100.25 offered.

"Qatar International Islamic Bank debut deal was fairly well received," a trader said. "So all told, a decent debut and trading tighter to Qatar Islamic Bank than I thought."

Longfor does deal

In its new deal, investment holding company Longfor Properties sold $400 million 6 7/8% notes due Oct. 18, 2019 at par to yield 6 7/8%, a market source said.

Barclays, Deutsche Bank and Morgan Stanley were the bookrunners for the Regulation S notes.

Also from Asia, Thailand-based energy company PTT PCL mandated Barclays, Citigroup, Deutsche Bank and JPMorgan as bookrunners for an issue of dollar notes, a market source said.

The Rule 144A and Regulation S deal will be marketed on a roadshow starting Friday.

Turkish bank plans notes

Turkey-based lender Turkiye Is Bankasi AS mandated Deutsche Bank, JPMorgan, Mitsubishi UFJ Securities and Standard Chartered Bank as bookrunners for a dollar-denominated issue of notes.

A roadshow for the Rule 144A and Regulation S deal will begin Oct. 15.

And the Republic of Poland could issue new notes by early 2013, a market source said, after bringing seven deals to the market so far this year.

Brazil's OAS gives guidance

In other deal-related news, Brazilian infrastructure company OAS SA set price talk at the 8½% area for a dollar-denominated issue of seven-year bonds.

BB Securities, Bradesco BBI, BTG Pactual, Deutsche Bank, HSBC and Itau BBA are the bookrunners for the Rule 144A and Regulation S notes, which include a change-of-control put at 101.

Pricing is expected Friday.

Lat Am sovereigns tighten

Most spreads for Latin American sovereigns were tighter by the end of Thursday, a New York-based trader said.

Argentina, in particular, saw good volume and some price volatility.

"Venezuela bonds close up a ¼ to a ½ but do give back about half of the early gains as Venezuela's 2027s close at 88.10 after the early high of 89.25," he said. "Venezuela and PDVSA bonds are making up the majority of Street activity."

Most corporate closed higher or unchanged, another trader said.

"Dramatic spread tightening occurring as well as inflows, keeping accounts chasing both new and secondary credits as the pipeline remains fairly constant and, at times, robust," he said.

Demand for Dubai names

In trading on Thursday, the 2017 notes from Dubai's DPWorld were quoted at 110 bid, 110.25 offered, about 13 bps tighter on the week, a trader said. "We've seen demand on the 2037s."

Dubai Electricity and Water Authority's 2020s were seen at 117.25, nearly unchanged on the month.

"Bahrain's 2020s and 2022s feel well supported again," he said.

SECO widens

Also from the Middle East, Saudi Electricity Co. (SECO)'s 2022s on Thursday were about 12 bps wider on the month.

The $1.25 billion 4.211% 10-year paper that priced at par to yield mid-swaps plus 195 bps was trading at 108.12 bid, 108.62 offered.

HSBC and Deutsche Bank were the bookrunners.

IPIC moves higher

International Petroleum Investment Co. (IPIC)'s bonds were "having a good run," a trader said. "Although mainly the 2017s, 2020s and 2022s are driven higher."

Meanwhile, Lebanon was quiet ahead of a possible swap or new issue, he said.

"Emaar Properties is well bid, with the 2016s at 113.25 on the bid side and the 2019s at 107.25 on the bid side," he said. "The long end is the usual story, with IPIC, RasGas and Qatar all holding very well."

Majid Al Futtaim trades up

In other trading from the Gulf region, the June issue of $500 million 5¼% notes due 2019 that Dubai's Majid Al Futtaim Holding LLC priced at par started Thursday's session at 104.06 bid, 104.56 offered.

The notes yielded 415.6 bps over mid-swaps with bookrunners JPMorgan, National Bank of Abu Dhabi, Barclays, Standard Chartered and UBS in a Regulation S transaction.

And the July issue of $300 million 3 7/8% notes due 2017 from South African financial company Investec Ltd. was quoted Thursday at 98¼ bid, 98¾ offered, a trader said.

The notes priced at 99.775 to yield Treasuries plus 310 bps via HSBC, ING, Investec, RBS and Standard Chartered Bank in a Regulation S deal.

Morocco in focus

Elsewhere in Africa, Morocco's 2020s were trading at 99.75 on Thursday morning before closing at par bid following Standard & Poor's revision of the sovereign's outlook from stable to negative.

"They cited their high deficit, lagging reforms and the weakening external economic environment," a trader said.

And Angola traded just under 110, he said. "Seeing small buyers of some of the sovereign bond," he said.

Ukraine bonds stabilize

The market for eurobonds from the Ukraine remained stable, with little impact on prices from Fitch Ratings' statement about the devaluation risk for the Ukrainian hryvnia, said Svitlana Rusakova of Dragon Capital.

"A lot of the risk is probably priced in already," she said.

The sovereign's 2020 notes were quoted at 99 bid, par offered while the 2021s were seen at par bid, 101 offered.

"Naftogaz continued to weaken, even after the coupon arrived to bondholders," she said.

The company's bonds slipped to 100.50 bid, 101.50 offered, she said.

"In the corporate sector, we saw two-way flows in Ukreximbank 2015s at 96.25 bid, 97.75 offered," she said.

And the city of Kiev's 2016s were trading at 91.25 bid, 93.25 offered.

Oversubscribed deals

The final book for the $400 million tap of Russian Railways' 5.7% notes due April 5, 2022 was $1.4 billion with about 100 accounts involved, a market source said.

The notes priced Wednesday at 112.869 to yield 4.05%, or Treasuries plus 234.5 bps via JPMorgan, RBS and VTB Capital in a Regulation S-only deal.

About 40% of the orders came from the United Kingdom, 30% from Europe, 16% from the United States, 8% from Asia and 6% from others. Funds accounted for 78%, banks 17% and private banks 15%.

Also oversubscribed was the $200 million issue of 8 7/8% notes due Oct. 15, 2017 that Banco Continental Paraguay SAECA priced at par to yield 8 7/8%.

Bank of America Merrill Lynch and Citigroup were the bookrunners for the deal.

The deal attracted more than $550 million in orders, a market source said.

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