Emerging markets come back after weak morning; VTB, Qatar commercial bank trade actively

By Aleesia Forni

Columbus, Ohio, April 5 - After a relatively quiet week, the tone of emerging markets was "pretty weak" Thursday morning, though there was some comeback later in the day.

VTB Capital SA traded very actively during the day, as the bonds were particularly popular with retail, according to a market source.

The deal did "pretty well," closing at 100.375 bid, 100.50 offered at the end of London's session.

The transaction was met with strong investor demand, with the order book being roughly 4.5 times oversubscribed with over 370 orders, according to the bank's chief financial officer Herbert Moss.

To recap, the Moscow-based investment bank priced a $1.5 billion issue of 6% five-year senior notes at par.

Meanwhile, cash continued to flow into emerging market bond funds this week, as inflows reached $507.3 million, according to a figure provided by fund-tracker EPGR Global. This is less than last week's figure of $522 million.

This increases the year-to-date inflows to $14.86 billion, according to a Prospect News analysis of the data.

Commercial Bank of Qatar active

Commercial Bank of Qatar Ltd.'s recent deal also saw a lot of trading during the day, settling at 99 bid, 99.10 offered at closing.

The bank priced a $500 million 3 3/8% five-year bond at mid-swaps plus 235 basis points, according to market sources.

The notes priced at 98.992 to yield 3.597%.

The bank is based in Doha, Qatar.

Russia trades up

Russia's new bonds also continue to trade above issue price after seeing some widening Thursday morning.

The sovereign priced $7 billion of bonds on March 28 in three tranches.

Russia's notes due 2017 traded at 100.375 bid, 100.50 offered, while the new notes due 2022 settled at 101 bid, 101.25 offered, a source said.

The $2 billion of 3¼% five-year notes priced at Treasuries plus 230 bps, or 99.657, and the $2 billion of 4½% 10-year notes priced at Treasuries plus 240 bps, or 99.277.

Also, Russia's $3 billion 5 5/8% 30-year bonds due 2042 traded at 101.125 bid, 101.50 offered.

The bonds originally priced at Treasuries plus 250 bps, or 99.553.

Shenzhen plans notes

In the primary market, Shenzhen International Holdings Ltd. (Baa3/BBB/) plans to issue dollar-denominated senior notes (Baa3/BBB-/) to institutional investors, according to a company news release.

UBS AG, Hong Kong Branch and Standard Chartered bank will act as the joint global coordinators and will be joined by DBS Bank, ING Bank NV, Singapore Branch, J.P. Morgan Securities Ltd. and BOCI Asia Ltd. as joint lead managers for the proposed Regulation S deal.

Pricing will be determined through a book-building exercise conducted by the banks.

Proceeds will be used for funding capital expenditures, refinancing existing debt and general working capital purposes.

Shenzhen International is a Hong Kong-based provider of logistics and transportation support services.

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