Korea Gas sets talk for dollar notes; Dubai Investments plans roadshow; EM stays solid

By Christine Van Dusen

Atlanta, Feb. 6 - Korea Gas Corp. set price talk on Thursday for its upcoming $500 million issue of 10-year notes - following fellow Korean utility Korea Midland Power Co. Ltd. to the primary market - on another positive day for emerging markets bonds.

"The better tone of the last few days is continuing, and we have generally seen clients rotate from sovereigns into corporates," a London-based analyst said. "We have seen selling in Romania, Hungary and African names this morning."

Meanwhile, flows for Turkish corporates and financials were fairly balanced, she said.

"[Akbank TAS] missed estimates with their result yesterday," she said. "Nonetheless, Turkish names are generally not being guided by newsflow currently."

Bonds from Akbank and Turkiye Garanti Bankasi AS (GarantiBank) were between 4 basis points and 5 bps tighter on Thursday morning, she said.

"In Russia we are seeing a mixed picture," she said.

Better performance was noted for Russian corporates like OAO Gazprom, Far Eastern Shipping Co. plc (Fesco) and Uralkali while long-end bonds from VimpelCom Holdings BV traded down, she said.

"This market is bid, and some bonds raced tighter," a London-based trader said at the European close. "Plenty of semi-professional buyers trying to cover other dealers' shorts. Unfortunately for them, they are easy to spot these days. Strong tone, poor liquidity, and Street still chasing the same bonds."

In deal-related news on Thursday, Dubai Investments Park Development Co. - a subsidiary of Dubai Investments PJSC - set a roadshow and the Republic of Tanzania again revised its plans for an issue of notes.

Korea Gas gives guidance

For its upcoming transaction, Korea Gas set talk at Treasuries plus 145 bps for the 10-year dollar deal with bookrunners BofA Merrill Lynch, Barclays, Goldman Sachs, JPMorgan and UBS.

This followed Korea Midland Power's pricing on Wednesday of $300 million 9¾% notes due in 2019 at a spread of 135 bps over Treasuries in a Regulation S deal, a market source said.

Petrobras, Vale tighten

In trading among Latin American corporates, bonds from Brazil's Petrobras and Vale SA tightened as much as 12 bps on Thursday morning, a New York-based trader said.

"Mostly go-go names and spread-traded names trading so far in the Street, and clients are better buyers but not strongly," he said.

Brazil-based Votorantim Cimentos SA saw better performance from its bonds "after being knocked down, hard, the last week," he said.

"These are typically lower-yielders through their curve and are easier to sell targets when the market gets into any type of unwind situation," he said.

Cemex gets a boost

Paper from Mexico's Cemex SAB de CV improved, despite releasing weaker earnings results this week.

"But that has more to do with the overall tone in Lat-Am corporates, as equity is down 1½% so far," the New York trader said. "Mexican bank paper is also doing much better after struggling yesterday to join the rally."

Banks from Colombia continued to underperform, he said.

Minsur eyed

The recent issue of Peru-based mining company Minsur SA's $450 million issue of 6¼% notes due 2024 that priced at 98.183 traded at 99.35 before settling in at 99¼ to 991/2, the New York-based trader said.

The notes came to the market at a yield of 6½%, or Treasuries plus 383 bps, with Scotiabank, BofA Merrill Lynch and JPMorgan in a Rule 144A and Regulation S deal.

The proceeds will be used for debt repayment and for general corporate purposes.

'Soured' sentiment for Ukraine

Looking to Ukraine, the currency remained weak, which has "soured sentiment" toward the sovereign's eurobonds so far this week, said Svitlana Rusakova of Dragon Capital.

"Volumes were limited but concerns about uncontrolled currency devaluation and bank stress led dealers to quote the sovereign down gradually," she said.

Sellers were spotted for quasi-sovereigns and corporates, she said.

"Yet it would be fair to admit that export-oriented issuers are starting to enjoy the long-delayed benefit via such [hryvnia] moves," she said.

Perpetuals tick up

From Africa, Gabon's 6 3/8% 2024 bonds were trading between 103¼ and 104 during the European morning, a trader said.

And from the Middle East, perpetuals were up as much a 1½ bps, he said.

"Bahrain is again a rock," he said. "Dubai has a real bid."

Long-dated bonds from the Middle East, including those from Saudi Electricity Co., Qatar and International Petroleum Investment Co., remained in demand, he said.

Upgraded Emaar's bonds tighten

Investors remained interested in Dubai-based Emaar Properties, which this week was upgraded to investment-grade by Standard & Poor's for the first time in four years.

The property developer's bonds tightened about 25 bps by midday on Thursday, a trader said.

By late in the European session, Emaar's 6.4% 2019s were trading at 110 1/8 bid, 110 5/8 offered, about 30 bps tighter on the week, he said.

Dubai developer sets roadshow

In other news from Dubai, Dubai Investments Park Development made plans to set out on Sunday for a roadshow to market a $300 million issue of five-year Islamic bonds, a market source said.

Al Hilal Bank, Citigroup, Dubai Islamic Bank and Emirates NBD are the bookrunners for the Regulation S sukuk.

Tanzania changes plans again

Tanzania has again revised its plans for a dollar-denominated issue of notes, this time setting the size at up to $1 billion and the timing at the second half of this year, a market source said.

The sovereign first announced plans for up to $2 billion of notes during 2013, then changed the size to a maximum of $700 million and the timing at the first half of 2014.

Now Tanzania is looking at a deal size of between $500 million and $1 billion.

No other details were immediately available on Thursday.

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