China's Yanzhou Coal sells notes; Russian banks, corporates tighten; Lat-Am volumes 'muted'

By Christine Van Dusen

Atlanta, May 16 - China's Yanzhou Coal Mining Co. Ltd. sold notes on Friday as corporate bonds from Russia tightened and notes from Latin America weakened slightly.

"Given the headlines and turbulence of recent months, this week was exceptionally uneventful," a London-based analyst said. "With few headlines out of Ukraine, Russian names were generally a little better on the week, while elsewhere [emerging markets] was marginally wider. But moves were very limited overall."

Bonds from Russian banks tightened an average of 20 basis points by the end of the week, with Russian Agricultural Bank a particular standout.

"Vnesheconombank also enjoyed a strong week," she said. "Underperformers were led by Credit Bank of Moscow - its 2018s were 31 bps wider - while Gazprombank perpetuals were also weak, 16 bps wider."

Corporate bonds from Russia were about 16 bps tighter by Friday, she said. Still, OAO Severstal managed to underperform, despite an upgrade by Fitch Ratings and the news that the company could sell two U.S. plants.

"Vimpelcom was the weakest name, with the 2023s 9 bps wider, after poor first-quarter 2014 results," she said.

In other trading on Friday, Latin American bonds experienced some weakness, a New York-based trader said.

"Some names were unchanged, but some were down about ¼ to ½ point, and spread-based credits have also widened, even as United States Treasury yields jump a few basis points," he said. "Volumes, overall, are quite muted, and I'm seeing better selling from most account bases, particularly real-money, although it's not deep or sizeable."

Corporate and bank bonds from Peru and Colombia traded well while Chile corporates softened a touch, he said.

BRF ticks up

The new issue of notes from Brazil-based food company BRF SA - 4¾% 10-year bonds that priced on Thursday at 99.422 to yield Treasuries plus 245 bps - was up about a ½ point in the secondary market on Friday, the New York trader said.

BB Securities, BTG Pactual, Itau BBA, Morgan Stanley and Santander were the joint bookrunners.

"The pipeline remains light, which is quite surprising given that we are quickly approaching summer," he said.

Turkish banks flatten

Looking to Turkey, bonds from banks and corporates were mostly flat on the week as the mine disaster in Soma and resulting protests kept investors cautious, the analyst said.

"Bank Asya was the top performer - its 2023s were 13 bps tighter - while Finansbank was a little weaker, having outperformed recently," she said.

Hungary widens

Elsewhere in the emerging markets universe, Hungary's bonds were 20 bps wider on the week while Lithuania and long-dated notes from Romania suffered.

From the Middle East, banks and corporates also were mostly flat by the end of the week, the analyst said.

"We did see perpetuals from Emirates National Bank of Dubai and Dubai Islamic Bank underperform, but not significantly, having performed well on a monthly basis," she said.

Yanzhou prices notes

China's Yanzhou Coal a $300 million issue of 7.2% perpetual notes at par to yield 7.2%, according to a company filing.

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

The proceeds will be on-lent to the company's subsidiaries for the repayment of indebtedness, capital expenditures, working capital and for general corporate purposes.

The coal production, processing, marketing and transportation company is based in Zoucheng, China.

Shenzhen Overseas sets talk

China's Shenzhen Overseas Chinese Town Co. Ltd. set talk in the 4 7/8% area for its planned issue of renminbi-denominated and benchmark-sized notes due in three years, a market source said.

ICBC (Asia), UBS, DBS Bank and CCB International are the bookrunners for the Regulation S deal.

The issuer is a tourism, properties and commodities company based in Shenzhen.

Chinese bank launches notes

China's Shanghai Pudong Development Bank Co. Ltd. set the yield at 4.08% for a RMB 1 billion issue of notes due in three years, a market source said.

HSBC, Standard Chartered Bank, Bank of China, Citigroup, HSBC and Shanghai Pudong Development Bank are the bookrunners for the Regulation S deal.

The proceeds will be used for working capital and general corporate purposes.

The lender is based in Shanghai.

Talk from Guotai Junan

China's Guotai Junan International Holdings Ltd. set talk in the Treasuries plus 220 bps area for its upcoming issue of dollar-denominated and benchmark-sized notes due in five years, a market source said.

Bank of China, Guotai Junan Securities, HSBC, Agricultural Bank of China, Bank SinoPac, Mizuho Securities, Standard Chartered Bank and Wing Lung Bank are the bookrunners for the Regulation S deal.

The proceeds will be used to meet the group's business operation needs, adjust debt structure, supplement working capital and make investments.

Guotai Junan is a Hong Kong-based investment holding company.

Hainan Airlines talks notes

China's Hainan Airlines Co. Ltd. set talk at 6¼% for its upcoming issue of renminbi-denominated and benchmark-sized notes due in three years, a market source said.

JPMorgan, UBS, CCB International, CLSA, DBS Bank, Deutsche Bank, Hong Kong International Securities and ICBC are the bookrunners for the Regulation S deal.

The proceeds will be used for refinancing, capital expenditures, working capital and general corporate purposes.

Hainan Airlines is based in Haikou, China.

KazAgro draws orders

The final book for Kazakhstan-based JSC National Managing Holding KazAgro's (KazAgro) €600 million 3.255% notes due May 22, 2019 was €2.7 billion from 240 accounts, a market source said.

The notes came to the market on Thursday at par to yield 3.255%, or mid-swaps plus 250 bps.

Pricing matched talk, set at mid-swaps plus 250 bps.

Citi, HSBC and RBS were the bookrunners for the Rule 144A and Regulation S deal.

About 38% of the orders came from Germany and Austria, 32% from the United Kingdom, 23% form other E.U. accounts, 1% from Kazakhstan and 6% from others.

Fund managers bought 81%, banks and private banks 11%, insurers and pension funds 7% and others 1%.

The notes traded on Friday at about 99.40.

Nigerian investors like Diamond

About 24% of the orders for the new deal from Nigeria-based Diamond Bank plc came from Nigeria, a market source said.

The $200 million 8¾% notes due in five years priced at 99.011 to yield 9% via Citigroup in a Rule 144A and Regulation S deal.

The United Kingdom picked up 22% of the orders, the United States 15%, other Europe 14%, Switzerland 13%, 6% Asia and 6% others.

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