China Development Bank, Tamweel, Banco do Brasil, others price notes amid steady flows for EM

By Christine Van Dusen

Atlanta, Jan. 12 - China Development Bank, Shui On Development (Singapore) Pty Ltd., Hong Kong's Sun Hung Kai Properties (Capital Market) Ltd., Dubai's Tamweel Funding III Ltd., Korea Gas Corp. and Banco do Brasil SA priced notes on a Thursday that saw an early wave of selling but limited activity by day's end.

Abu Dhabi's International Petroleum Investment Co. was particularly active, a trader said.

"It's very strong, with spreads at levels not seen since mid-December," he said.

And Russia, Turkey and Dubai were standouts on Thursday, all 5 basis points to 10 bps firmer.

"Russian risk is unbelievably firm, while elsewhere flows are more balanced," a London-based trader said. "Turkey is also putting in a strong performance today, 5 bps tighter as current account concerns from early in the week dissipate."

South Africa bounced, helping the new 2024s back to reoffer, another trader said. Ukraine, meanwhile, was largely ignored by the market.

"And in Qatar and Abu Dhabi it's unusually weak, with spreads 5 to 10 bps wider," he said. "Overall it's the same story, with clients focused on sovereign and quasi-sovereign risk while activity in corporates is limited to Street players. We trade more like mid-summer than mid-January.

In the afternoon, Dubai and Bahrain continued to do fairly well, a trader said.

"The long end feels very well offered and with liquidity poor, I suspect dealers are having to hit other parts of the curve to hedge," he said.

Overall, the afternoon was fairly subdued, he said, though flows were steady.

"We're seeing good two-way interest in Abu Dhabi National Energy Co.'s 2017s and 2014s," he said. "It will be interesting to see who is up next on the new issue train."

China Development sells notes

In its new deal, Beijing-based lender China Development Bank priced RMB 1.5 billion notes due Jan. 19, 2027 at par to yield 4.2%, a market source said.

Barclays Capital, Citigroup, HSBC, Deutsche Bank, Standard Chartered Bank and RBS were the bookrunners for the Regulation S deal.

And Shui On Development priced S$225 million notes due Jan. 26, 2015 at par to yield 8%, a market source said.

Standard Chartered, BNP Paribas, Deutsche Bank and UBS were the bookrunners for the Regulation S deal.

Proceeds will be used to fund capital expenditures and to acquire, develop, construct or improve assets.

Sun Hung Kai does deal

Also on Thursday, Hong Kong's Sun Hung Kai Properties priced a $275 million tap of its 3½% notes due Nov. 2, 2016 at 99.839 to yield Treasuries plus 270 bps, a market source said.

The original $500 million notes priced at 99.901 to yield Treasuries plus 245 bps.

Citigroup was the bookrunner for the Regulation S notes.

The notes were guaranteed by Sun Hung Kai Properties Ltd., a Hong Kong-based property developer.

And South Korea-based Korea Gas priced a $750 million issue of 6¼% notes due Jan. 20, 2042 at 98.063 to yield Treasuries plus 345 bps, a market source said.

The notes priced below talk, which was set at Treasuries plus 350 bps to 362.5 bps.

Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS were the bookrunners for the Rule 144A and Regulation S deal.

Tamweel prices bonds

Dubai's Tamweel Funding priced $300 million sukuk notes due Jan. 18, 2017 at par to yield 5.154%, or mid-swaps plus 400 bps, a market source said.

Citigroup, Dubai Islamic Bank and Standard Chartered Bank were the bookrunners for the Regulation S deal.

Tamweel Funding is a unit of Tamweel PJSC, a real estate developer.

"The book didn't sound like it was massively covered, so it will be interesting to see how that little one trades," a trader said.

LatAm issuers get busy

Brazil-based lender Banco do Brasil priced a $1 billion issue of perpetual notes (/BB/) at par to yield 9¼%, a market source said.

The notes priced at the low end of talk, which was set at 9¼% to 9½%.

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

In other deal-related news, Mexico-based bakery and food company Grupo Bimbo SAB de CV is planning an issue of up to $800 million notes due 2022, a market source said.

The proceeds will be used to refinance existing debt, according to a report from Moody's Investors Service.

Slovak Republic sees demand

The final book for the Slovak Republic's €1 billion issue of 4 5/8% notes due Jan. 19, 2017 was more than €1.2 billion with more than 135 accounts involved, according to a market source.

The deal priced at 99.69 to yield 4.696%, or mid-swaps plus 305 bps, via HSBC, Societe Generale, Tatra Banka and Unicredit in a Regulation S deal.

About 38% of the orders came from Austria, 13% from Germany, 12% from Slovakia, 10% from Asia, 6% from Benelux countries, 6% from Central Europe, 5% from the United Kingdom, 3% from Italy, 3% from Switzerland and 4% from others.

Banks accounted for 57%, funds 21%, central banks 10%, insurers 5% and others 7%.

First Gulf attracts orders

The final book for Abu Dhabi-based FGB Sukuk Co. Ltd.'s $500 million 4.046% notes due Jan. 18, 2017 was more than $1.4 billion with more than 80 orders, a market source said.

The notes priced at par to yield 4.046%, or mid-swaps plus 287.5 bps with bookrunners Citigroup, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank in a Regulation S transaction.

About 69% of the orders came from the Middle East, 16% from Asia and 15% from Europe. Banks accounted for 72%, funds 18%, private banks 7% and insurers 3%.

FGB Sukuk is a unit of First Gulf Bank PJSC, a lender based in Abu Dhabi.

"The freshly printed 2017s had a solid morning, trading up to 100.55 on local support before it too faded into the close," he said. "It was last down at 100.20."

Poland paper in demand

Also oversubscribed was the Republic of Poland's €750 million tap of its 3¾% notes due March 29, 2017. The deal attracted more than €1 billion in orders with more than 70 accounts involved, a market source said.

The Regulation S notes - via Barclays Capital, Societe Generale and Unicredit - priced at 98.284 to yield 4.121%, or mid-swaps plus 237 bps.

About 35% of the orders came from Poland, 17% from Austria, 11% from France, 9% from Germany, 6% from the United Kingdom, 5% from Asia, 5% from Hungary, 3% from Italy, 3% from Finland, 2% from Switzerland and 4% from others.

Banks accounted for 44%, funds 37%, insurers and pensions 13%, central banks 5% and corporates 1%.

Hutchison Whampoa eyed

And the two-tranche issue of $1.5 billion notes due 2017 and 2022 from Hong Kong-based business conglomerate Hutchison Whampoa Ltd. was also oversubscribed.

Goldman Sachs, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The deal included $500 million 3½% notes due Jan. 13, 2017 that came to the market at 99.519 to yield Treasuries plus 275 bps. That tranche attracted $1.2 billion of orders, with 73% from the United States, 18% from Europe and 9% from Asia. Asset managers accounted for 73%, private banks 8%, banks and central banks 5% and insurers and pensions 4%.

The $1 billion tranche due Jan. 13, 2022 - which priced at a spread of Treasuries plus 275 bps - attracted $1.6 billion in orders, with 47% from the United States, 36% from Asia and 17% from Europe. Asset managers accounted for 66%, insurers and pensions 16%, banks and central banks 11% and private banks 7%.

BTA Bank in focus

In other news, the situation continued to look negative for Kazakhstan's BTA Bank following a meeting with Global Depository Receipt holders.

"The meeting was anything but upbeat," a London-based analyst said. "The conference confirmed our views about the precarious state of the bank's fundamentals and the dire situation creditors are faced with."

It seems clear that BTA Bank will not be paying its coupon and could reach an equity shortfall of $5 billion this fiscal year, she said.

"If no compromise is reached, then the bank will be faced with insolvency, which is likely to provide negligible recovery for the creditors, if at all," she said. "This relatively aggressive stance from BTA has led to the senior bonds falling 4 points."

Said a trader, "There's a lot of chat about whether BTA's aggressive stance is positive for Kazakhstan risk in general. For now the market doesn't think so."

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