Primary market opens again with Credito Real, China Construction Bank; Pakistan, Zesco ahead

By Christine Van Dusen

Atlanta, March 6 - Mexico's Credito Real SAB de CV and China Construction Bank Corp. sold notes on a Thursday that saw better spreads for Middle Eastern names and some weakness for Latin American corporate bonds.

"The Middle East and North Africa are trying to open on the front foot," a trader said. "Spreads are a couple better, with the rates move."

Qatar's 2022s traded Thursday at 109, tighter by about 28 basis points on the month, a trader said.

And Qatar National Bank's 2018s and 2020s were 20 bps wider on the week, he said.

Meanwhile, bond performance was "very solid" for Africa on Thursday, a trader said.

"Angola is now 50 bps tighter on the week, Senegal 40 bps and Ghana 45 bps," he said. "Granted, we were probably oversold when Ghana 2023s were hit down at 87 a few weeks back, but as we know, with Africa, it's either bid or it's not. At the moment, it's bid."

"South Africa had another very good day, with demand for Investec Bank," he said. "Sovereign bonds are 40 bps to 45 bps tighter over the month and 3 bps to 6 bps tighter today."

Morocco remained strong, he said, with the sovereign's 2022s about 65 bps better on the month.

Latin American corporate bonds, however, experienced some very mild weakness into the close on Thursday, a New York-based trader said.

But the bonds had entered Thursday's session on solid ground, hitting "markedly higher levels," so most names were "still in very good shape" at the end of the day, he said.

All of this came against the backdrop of greater turmoil in and around Ukraine, where Crimea's parliament voted to join Russia and President Barack Obama ordered sanctions against Moscow.

Cemex holds gains

Mexico's Cemex SAB de CV continued to trade well on Thursday, with the 2019s, 2021s and 2022s holding on to their gains, the New York-based trader said.

A big seller emerged on Thursday for the 2018s in the morning, he said.

But the 2020s lagged the rally.

Credito Real prices notes

In its new deal, Mexico-based consumer financing company Credito Real priced an upsized $350 million issue of 7½% notes due 2019 at par to yield 7½%, a syndicate source said.

The notes, which were initially expected to total $300 million, were talked at a yield in the 8% area.

Barclays, BofA Merrill Lynch and Credit Suisse were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes, to fund a tender offer of its 2015 senior notes and to repay certain indebtedness.

The tender offer and consent solicitation for the company's outstanding 10¼% senior notes due 2015 began last month.

The total purchase price will be $1,095 per $1,000 of notes tendered by 5 p.m. ET on March 10, the early tender date.

The total amount includes an early tender payment of $30 per $1,000 of notes.

The tender offer will end at midnight ET on March 24, with early settlement set for March 13.

China Construction does deal

Also on Thursday, China Construction Bank priced RMB 4 billion 3¼% notes due 2016 at par to yield 3¼%, a market source said.

Bank of China Hong Kong, China Construction Bank Intl, HSBC, ICBC Asia, Standard Chartered Bank and UBS were the bookrunners for the Regulation S deal.

China Construction Bank is based in Beijing.

China Eastern Airline sets talk

Shanghai-based China Eastern Airlines Corp. Ltd. set talk in the 4 7/8% area for its upcoming renminbi-denominated issue of benchmark-sized notes due in three years, a market source said.

Agricultural Bank of China Hong Kong branch, DBS Bank, Deutsche Bank, HSBC and Standard Chartered Hong Kong are the bookrunners for the Regulation S deal.

The notes will be issued by Eastern Air Overseas (Hong Kong) Corp.

Pakistan roadshow ahead

Pakistan will set out on a roadshow to market an issue of notes that is likely to come to the market in April, a market source said.

No other details were immediately available on Thursday.

Bulgaria picks bookrunners

Bulgaria has mandated Citigroup, HSBC and JPMorgan for an offering of notes that could total as much as €1 billion, a market source said.

No other details were immediately available on Thursday.

Zambian Electricity Supply Corp. (Zesco) could issue as much as $500 million of bonds by the end of 2015, a market source said.

No other details were immediately available on Thursday.

Zesco is a power company based in Lusaka, Zambia.

AIA deal oversubscribed

The final book for China-based AIA Group's recent $1 billion issue of five- and 30-year notes was about $11.3 billion, a market source said.

The deal included $500 million 2¼% notes due 2019 that priced at 99.634 to yield 2.328%, or Treasuries plus 80 bps.

The second tranche totaled $500 million 4 7/8% notes due 2044 that priced at 98.45 to yield 4.975%, or Treasuries plus 135 bps.

Citigroup, Deutsche Bank, HSBC and Morgan Stanley were the bookrunners for the Rule 144A and Regulation S deal.

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