Santander Brasil, Tallink print bonds; volatility continues; Majid al-Futtaim postpones

By Christine Van Dusen

Atlanta, June 3 - Banco Santander Brasil SA (Cayman branch) and Estonia's AS Tallink Grupp priced notes on a busy and volatile Monday for emerging markets assets.

Investor sentiment was impacted by the anti-government protests in Turkey, with the sovereign's five-year credit default swaps moving to 145 basis points from 106 bps just three weeks ago.

"Tricky start to the month," a London-based trader said. "Throw in a poor Institute of Supply Management print out of the US and it was a weak session."

Asian accounts were big sellers on Monday, he said.

"Plenty of loose bonds from last week still to clear from dealers' books," he said.

Notes from Dubai-based Majid al-Futtaim Holdings LLC were "for sale" during the session, even as the conglomerate delayed a perpetual issue of dollar-denominated hybrid notes due to volatile market conditions, a trader said.

Goldman Sachs, HSBC, BofA Merrill Lynch, JPMorgan and Standard Chartered Bank were the bookrunners for the deal.

"Saudi Electricity Co. is also for sale, as is Tamweel," the London trader added. "Few bonds remain stubbornly well-bid, and I still maintain accounts should sell these and move into something or anything else."

He pointed to Mubadala's 2016s, which are 33 bps tighter on the month.

"Sell this and move into better opportunities," he said. "Dubai Electricity and Water Authority is marked lower, however spread-wise the 2016s through the 2020s have held in pretty well. The 2015s have come off the most."

Two-way activity was noted for Dubai Holding's 2014s while regional demand was seen for Emirates NBD's recent perpetual notes.

"Dubai names were hit in the afternoon, with sovereign paper closing well-offered," another trader said. "Flow wise, it was 45-55 in favor of buyers."

Middle East in focus

Some regional demand was sighted for Emirates NBD's recent issue of perpetual notes at the 95 to 95½ level, the London trader said.

Dubai Islamic Bank's perpetuals, which priced at par, were off by a point.

"That's dragged Abu Dhabi Islamic Bank down too," he said. "Also seen some demand for Abu Dhabi Commercial Bank paper again. Retail investors are nibbling on Bahrain Telecommunications and Emirates, but they are all well-offered in the Street."

Meanwhile, Qtel International's 2023s and 2028s were trading with a 94 handle, he said.

"Not much love for Dolphin Energy lately, but I think 2019s look interesting," he said. "Abu Dhabi National Energy Co. (TAQA) still feels for sale."

Ukraine bonds softer

Bonds from Ukraine have been softer, with low offers getting a lift, said Svitlana Rusakova of Dragon Capital.

"We continued to see the same trading pattern of bid not getting hit," she said. "Overall, the long end of the curve was down one point."

The sovereign bonds, overall, have outperformed the broader EM universe, she said.

"Markets are re-pricing quite substantially, driven first and foremost by the sell-off in US Treasuries," according to a report from Erste Group Research.

In the month of May, global bonds experienced their biggest loss in as much as nine years, according to the BofA Merrill Lynch Global Broad Market Index.

"And [Central and emerging Europe] has not been exempt," Erste Group said.

Santander Brasil sells notes

In its new deal, Banco Santander Brasil (Cayman branch) priced a CHF 125 million issue of 1 1/8% notes due 2015 at 100.396, a market source said.

The notes were talked at a coupon of 1% to 1 1/8%.

Credit Suisse was the bookrunner for the transaction.

Tallink does deal

Also on Monday, Estonia-based shipping company Tallink priced NOK 900 million senior notes due 2018 at par to yield Nibor plus 500 bps.

Danske Bank Markets and SEB Markets were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for refinancing and strengthening the company's financial position.

Lenovo hits the road

In other deal-related news, China-based technology company Lenovo is on a roadshow for a dollar-denominated issue of notes, a market source said.

Credit Suisse, Goldman Sachs, BNP Paribas, Bank of China, HSBC, Mitsubishi UFJ Securities, Mizuho Securities, RBS and Standard Chartered Bank are the bookrunners for the Regulation S deal.

The roadshow began on Monday and will take place in Hong Kong, Singapore and London.

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