Oversea-Chinese Banking, MB Petroleum, others print notes; spreads widen on debt worries

By Christine Van Dusen

Atlanta, Nov. 8 - New bond deals came at a steady clip from the emerging markets on Monday - with notes from Singapore's Oversea-Chinese Banking Corp. Ltd., Oman's MB Petroleum Services, India's Icici Bank Ltd., Turkey and Jordan - even as risk aversion grew on concerns about European finances and Germany's proposal to handle sovereign debt problems.

Most five-year credit default swaps widened by between 3 and 6 basis points, with Argentina closing the day up 6 bps, Venezuela up 10 bps and Hungary up 10 bps.

Overall, the tone was "weak," a California-based market source said. But "new issues are holding in. We had a lot of flows to trade."

Debt clause criticized

The widening of spreads had investors focused on the sovereign debt crisis, and the anxiety only worsened upon word of a German proposal that would require that all bond offerings include a clause allowing for restructuring. On Monday Greece was the latest to oppose the clause.

Also on the market's mind on Monday was the week's upcoming release of economic data from China, which is expected to show "further evidence that activity has stabilized," according to an RBC Capital Markets report. "The key downside-surprise risk is export growth, which likely moderated on the month."

If the numbers come in weaker than expected, that could "raise concerns about the strength of external demand," the report said.

If the numbers are stronger, that would "add to the case for further normalization of monetary policy" and raise the possibility "that the authorities could push interest rates higher" and "increase reserve requirements," RBC said. "As such, the Chinese figures could present a risk for EM markets later in the week."

Pipeline open

Meanwhile, the primary market was abuzz with activity.

"We are, again, busy," a Zurich-based trader said. "Nothing can stop the EM market at the moment."

Among the deals to price on Monday was Singapore's Oversea-Chinese Banking (OCBC Bank) with $500 million 3¾% notes due Nov. 15, 2022 at 99.367 to yield 3.854%, or Treasuries plus 275 bps, a market source said.

JPMorgan, Morgan Stanley, RBS and OCBC Bank were the bookrunners for the Regulation S deal, which was talked at a spread of 275 bps over Treasuries.

Also pricing on Monday was Oman-based oilfield services company MB Petroleum Services' $320 million 11¼% notes due Nov. 15, 2015. The notes came to market at par to yield 11¼%, a market source said.

Barclays Capital, HSBC and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal, which was talked to yield in the 11¼% area.

And India's Icici Bank priced $1 billion 5¾% notes due Nov. 16, 2020 at 99.542 to yield 5.811%, a market source said.

Barclays Capital, Citigroup and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal, which was talked at a spread in the Treasuries plus 335 bps area.

Turkey, Jordan print notes

In another new deal, the Republic of Turkey priced a €500 million tap of its 5 1/8% notes due May 18, 2020 at 106.697 to yield 4¼%, a market source said.

BNP Paribas, Deutsche Bank and HSBC were the bookrunners for the Regulation S-only deal, which was talked to yield between 4.3% and 4.35%.

The original €1.5 billion issue priced in April at 99.383 to yield mid-swaps plus 190 bps.

Also pricing notes was Jordan with $750 million 3 7/8% notes due Nov. 12, 2015 coming to market at 98.881 to yield 4 1/8%, or Treasuries plus 300.5 bps, a market source said.

Arab Bank, Credit Suisse, HSBC and JPMorgan were the bookrunners for the Regulation S deal, which was talked at a yield in the 4¼% area.

"There are a lot of things going on in EM today," a New York-based market source said.

Many of the issuers coming to market are "higher yield," he said. "There are a lot of BB and B issuers in the market. There are some high-grade, but the majority are not."

Peru, BBVA plan deals

Several issuers moved closer to market on Monday, including the Republic of Peru, which has mandated Bank of America Merrill Lynch and Morgan Stanley for a dollar-denominated bond, a market source said.

A roadshow for the Securities and Exchange Commission-registered deal ends this week.

Proceeds will be used to reimburse Peru's Public Treasury about $63 million in connection with the financing and tender offer of global bonds from April and to pre-finance a portion of the general financial requirements for the year 2011.

Concurrently, the sovereign is offering sol-denominated bonds in a Rule 144A and Regulation S transaction, according to a 424B5 filing with the SEC.

Also from Latin America, Brazil-based lender Banco BVA SA set price talk for its planned dollar-denominated issue of three-year bullet notes via BCP Securities and UBS at a yield in the 7½% area.

The Regulation S-only deal is expected to price this week.

"I think we'll continue to see activity in Latin America until the end of November," the New York-based market source said. "It's been a very, very active year. Investors are very comfortable with the region."

TVN plans roadshow

Also on Monday, Poland-based cable television operator TVN Finance Corp. III AB was planning a roadshow for a €715 million offering of eight-year notes via Nomura, JPMorgan and Deutsche Bank in a Rule 144A and Regulation S deal.

Pricing is expected on Wednesday for the notes, which are non-callable for three years.

Proceeds will be used to refinance existing debt.

The day also saw Indonesia-based Aerospace Satellite Corp. Holding BV - a special purpose vehicle of satellite pay television company PT MNC Sky Vision - set price guidance for its planned issue of $180 million to $200 million five-year notes at the 12¾% area, a market source said.

HSBC and Standard Chartered are the bookrunners for the Rule 144A and Regulation S notes, which are non-callable for three years.

Proceeds will be used to finance acquisitions and other issue-related expenses.

And the Republic of Lebanon set price guidance for its $725 million two-tranche issue of notes due 2018 and 2022, a market source said.

The $500 million eight-year notes were talked at a yield between 5.15% and 5.2%. The $225 million 12-year notes - initially sized at $200 million - were talked at between 6.1% and 6.15% yield.

Bank of Beirut and Credit Suisse are the bookrunners for the deal, which is expected to price this week.

Other bonds on tap

In other news on Monday, Abu Dhabi-based oil industry investment company International Petroleum Investment Co. set the tenors for its planned dollar-denominated bonds at five and 10 years, a market source said.

Goldman Sachs, Bank of America Merrill Lynch, HSBC, National Bank of Abu Dhabi, Standard Chartered and RBS are the bookrunners for the Rule 144A and Regulation S transaction.

Anheuser-Busch InBev Worldwide Inc. plans to issue real-denominated notes due 2015, according to a 424B5 filing with the SEC.

Barclays Capital, Deutsche Bank and Itau are the bookrunners for the SEC-registered notes, which will be payable in dollars.

Proceeds will be used to repay a portion of the issuer's outstanding debt and for general corporate purposes.

And Hong Kong's Dah Sing Bank Ltd. is planning to add on between $50 million and $75 million to its existing notes due Oct. 7, 2013, a market source said.

The tap, via HSBC, is being talked at a spread of Libor plus 135 bps. The original issue totaled $175 million and came with a coupon of Libor plus 135 bps.

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