Agrokor, Global Bank, Eurasian Development sell notes as week ends on firmer, careful note

By Christine Van Dusen

Atlanta, Sept. 28 - Croatia's Agrokor dd, Panama's Global Bank Corp. and Kazakhstan's Eurasian Development Bank priced notes on a firmer and cautiously optimistic Friday for emerging markets assets.

Investors are expected to remain positive but careful, given recent moves by the European Central Bank, according to a report from Barclays.

"While the timing of a global growth rebound remains uncertain, the tail risks for investors, in particular those related to the euro area, have been reduced," the report said. "This improves the outlook for risky assets and should support flows into EM assets."

Issuance should continue to click along for emerging markets, a London-based trader said. Indeed, Friday saw several issuers, including Bulgaria's Corporate Commercial Bank and Chile's Telefonica Moviles Chile SA, taking steps toward new deals.

"The market is starting to ready for supply," the trader said.

And while spreads were wider on most credits, trading was fairly well supported for most of Friday's session, he said.

"The only possible exception is Dubai Electricity and Water Authority [DEWA], which closed out well-offered, late," he said.

Demand was seen for Qtel International's 2021s, Abu Dhabi National Energy Co. (TAQA)'s 2021s, the International Petroleum Investment Co. (IPIC) curve and RasGas. Lebanon's 2021s also put in a solid effort this week, ending a solid month.

"This credit definitely lagged over the latter part of the summer and is playing good catch-up to peers," a trader said. "There's continued chatter over a possible new deal."

Bahrain notes supported

Meanwhile, Bahrain was holding well.

"Front-dated bonds remain well supported, obviously," he said. "The only thing missing from a very solid bout of spread tightening today was a drop in US Treasury prices."

The market will likely tighten when Treasuries move back to where they were a week ago, he said.

"The market definitely saw some paper come out earlier in the week, and in fact, the past two weeks have seen a pause and consolidation," he said. "Still a technical market, and still plenty of bonds where the free float is light."

Agrokor does deal

In its new deal, Agrokor priced a $300 million tranche and an upsized €325 million tranche of senior notes due 2020.

The dollar-denominated tranche priced at par to yield 8 7/8%, at the tight end of price talk set in the 9% area.

The euro-denominated tranche, which was upsized from €250 million, priced at par to yield 9 1/8%, at the tight end of price talk set in the 9¼% area.

BNP, JPMorgan and UniCredit were the joint bookrunners.

Proceeds will be used to refinance debt.

Lenders price notes

Panama's Global Bank sold $200 million 4¾% notes due 2017 at 98.906 to yield 5%, or Treasuries plus 438.5 basis points, via Deutsche Bank and HSBC in a Rule 144A and Regulation S transaction.

The notes priced at the tight end of talk, set at the 5% to 5 1/8% area.

And Kazakhstan's Eurasian Development Bank priced a RUB 5 billion issue of 8% notes due 2017 at par to yield 8%, a market source said.

The notes were talked in the 8 3/8% area.

RBI and Sberbank were the bookrunners for the Regulation S deal.

Banco ABC Brasil sells bonds

These new deals followed the late-Thursday pricing of Banco ABC Brasil's $100 million increase of its 7 7/8% notes due 2020 at 106.50, in line with talk, set at the 105 area.

HSBC, Itau and Santander were the bookrunners for the Rule 144A and Regulation S deal.

The outstanding size is $300 million.

Proceeds will be used to increase the bank's capital base and for general corporate purposes.

Bulgarian bank gives guidance

In deal-related news, Corporate Commercial Bank set talk at 8¼% for its planned dollar-denominated issue of notes due 2014.

VTB Capital is the bookrunner for the Regulation S deal, which will be issued by special-purpose vehicle Northern Lights Bulgaria BV.

Telefonica Moviles Chile mandated BBVA, Citigroup and JPMorgan for an issue of notes that will be marketed during a roadshow from Oct. 1 to Oct. 3, a market source said.

The marketing trip for the Rule 144A and Regulation S deal will begin in London and travel to New York before wrapping up in Boston, Lima, Peru, and Los Angeles.

Ukraine bonds underperform

In trading, Ukraine's eurobonds continued to underperform at the end of the week, said Svitlana Rusakova of Dragon Capital.

"The sovereign curve slipped by a 1/2-point to 1 point," she said.

Ukraine's 2017s were down at 104.50 bid, 105.50 offered, while the 2021s were quoted down a point at 99 bid, par offered.

"Corporates were mixed," she said. "Oschadbank remained under the selling pressure at 95.50 bid, 06.50 offered while Ukreximbank 2015s enjoyed some buying support and were quoted at 96 bid, 98 offered, with buyers looking for bonds at mid-market levels."

Two-way flows were reported for Metinvest.

Kazakhstan banks in focus

Looking at Kazakhstan, the banking sector has seen no major changes in its financial health, a London-based analyst said, and Halyk Bank remains the preferred credit.

"We continue to see modest system-wide loan growth, with no improvement in asset quality and profitability of the banks," she said.

Non-performing loans have grown for BTA Bank.

"The only outlier has been Halyk Bank, which registered good growth and improved profitability," she said. "In terms of market performance, the sector will continue to be largely dominated by the pending BTA restructuring and the Alliance Bank and Temir Zholy merger."

Isbank performs, Zambia widens

From Turkey, lender Isbank was an outperformer in trading on Friday, a trader said.

And from Africa, Zambia's new notes were 25 bps wider on the week.

"A little bit of Access Bank action this afternoon, and Angola is quiet, having been 110 bid mid-week," he said. "Afrexim's 2016s still feel well sought after, as does Namibia."

Bonds from South Africa received attention on Friday ahead of their entry into Citigroup's World Government Bond Index (WGBI) on Oct. 1, Barclays said.

"There is a lot of speculation about how much money could flow into South Africa as funds increase their weighting in line with this inclusion," the bank said in a report. "It makes sense that investors might have bought domestic bonds ahead of the inclusion date, with the knowledge that passive mandates would be forced buyers when South Africa bonds were included in the index."

South Africa could see flows

Barclays expects some passive money still could flow into the market after South Africa's inclusion in the index.

"There is a risk that the market could come under pressure," the report said.

The sovereign's long-term Rand 186 bond will gain the most support following the inclusion into the index, Barclays said.

"It has the largest weight and the second-highest turnover in the market," the report said.

Severstal deal ahead

Some market-watchers were keeping an eye out for the upcoming deal from Russia's OAO Severstal. The steel and mining company is planning dollar notes via Citigroup, ING, JPMorgan and VTB Capital in a Rule 144A and Regulation S deal.

One market source said she expects the size to be $500 million to $1 billion and the tenor seven years.

"We remain constructive on the credit and, given Severstal's sub-investment grade rating but strong fundamentals, we expect the bond to price at no more than a 50 bps premium over [recent issuer Novolipetsk Steel]," she said.

She expects the proceeds from the deal - which is being marketed on a roadshow that starts Oct. 1 - will be used for short-term debt repayment.

"This potential eurobond should be met with good demand," she said.

Metalloinvest could sell notes

In other news from the Russian corporate sector, Metalloinvest issued its financial results for the first half of the year, which were soft, as expected, the analyst said.

"A conference call is scheduled for Monday," she said. "More color on current trading and a potential bond offering are to be expected from the call next week."

Serbia notes in demand

The final book for Serbia's $1 billion add-on to its 7¼% notes due 2021 was $4.3 billion with 190 accounts involved, a market source said.

The notes came to the market at 104.179 to yield 6 5/8%, or Treasuries plus 497.4 bps, via Deutsche Bank and JPMorgan in a Rule 144A and Regulation S deal.

About 70% of the orders came from the United States, 19% from the United Kingdom, 9% from Europe and 2% from others.

Funds picked up 90%, banks and private banks 5% and others 5%.

BOC Aviation sees orders

Also oversubscribed was the new $500 million issue of 2 7/8% notes due 2017 from Singapore-based BOC Aviation.

The aircraft leasing company sold the notes at 99.525 to yield 2.978%, or Treasuries plus 235 bps, with BOCI, Citigroup and HSBC in a Regulation S deal.

The final book was $4 billion with 170 accounts involved, with 81% from Asia and 19% from Europe and the Middle East.

Asset and fund managers took up 47%, banks 28%, private banks 19% and insurers 6%.

Paul A. Harris contributed to this article.

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