Asian issuers plan roadshows, deals; continued euro turmoil, UK holiday hamper EM trading

By Christine Van Dusen and Aleesia Forni

Atlanta, June 5 - Asian issuers forged ahead with roadshows and deal plans on Tuesday, even as emerging markets assets suffered another weak session as a result of negative economic reports from Europe, the holiday in the United Kingdom and anxiety about the global debt crisis.

The negative sentiment was not helped by the Group of Seven's conference call on Tuesday, which yielded little in the way of concrete plans. Still, there was a glimmer of hope, as Germany said it would take all necessary steps to bail out the euro zone.

"Market sentiment seems to have stabilized on hopes that European Union government officials will evaluate and implement policies to shore up capital in peripheral banks," according to a report from Barclays Capital Markets.

"Still, the markets appear to be wondering whether sovereigns will be responsible for capital losses or whether the [European Stabilization Mechanism and European Financial Stability Facility] would be allowed to capitalize banks from their funds." Investors are hoping for the latter, the report said, "which would relieve sovereigns of the contingent liabilities of their banks."

Fixed-income markets continued Monday's trend, according to a report from Erste Group.

"Fixed income markets are obviously extremely thin at the moment as the global growth fear factor combines with the bank holiday in the UK," the report said. "Trading in Central European credit default swaps was at a virtual standstill yesterday and bond markets also did very little."

Deals that were expected to come to market remained in the wings, including dollar notes from Russia-based credit card lending institution Tinkoff Credit Systems, which concluded a roadshow on May 16 for a Regulation S deal with Citigroup, JPMorgan and VTB Capital.

Still, some Asian names could go ahead and issue notes, including China-based Tingyi Holding Corp. and China Datang Overseas.

Market-watchers were also whispering about possible peso-denominated notes from the Republic of the Philippines, which sets out on a non-deal roadshow on June 11 with Citigroup, Morgan Stanley, JPMorgan and Goldman Sachs.

EM poised to rise

Given all of the volatility in the markets and the global deleveraging seen at commercial banks, bond issuance could soon replace loans as the funding vehicle of choice, said Jerry Brewin of Aviva Investors.

"This suggests the future in EM will be evidenced by an expansion in EM bond activity," said Brewin, head of the company's emerging markets portfolio.

"Given the shift in economic power and trade, the question then is not whether the future is EM, but will the old-world heavy investing and trading be an effective model for new EM markets that will demand everything from infrastructure and resource financing to government bond financing?"

The current chaos and stunted growth of developed markets is leaving room for the rise of emerging markets as economic players, he said.

"The older, indebted societies will experience a loss of influence in every sense over the next months and years," he said. "I think that moment of transition is happening now."

Jafza sets deal size

In deal-related news, Dubai's Jebel Ali Free Zone (Jafza) set the size at $650 million for a planned issue of sukuk that could carry a tenor of seven years, a market source said.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD, National Bank of Abu Dhabi and Standard Chartered are the bookrunners for the Regulation S deal.

Proceeds will be used to refinance existing debt for Jafza, which operates an industrial free zone outside of Dubai.

VEB mulls renminbi notes

Russia's Vnesheconombank (VEB) is considering an issue of renminbi-denominated notes worth about $500 million, a market source said.

The notes are expected to carry a tenor of no less than five years.

The Moscow-based lender recently announced plans for a benchmark-sized issue of dollar notes due 2022.

No other details were available on Tuesday.

Tingyi plans marketing trip

China-based Tingyi Holding will host a roadshow ahead of a possible dollar-denominated offering of senior notes, a syndicate source said.

The meetings will be held in Singapore on June 6, in Hong Kong on June 7 and in London on June 8.

The food and beverage producer's offering is subject to market conditions and investor interest.

Proceeds will be used to finance capital expenditures relating to the company's alliance with Pepsi Co., to repay certain loans and for working capital and other general corporate purposes, according to a company release.

Barclays Capital and Deutsche Bank are bookrunners for the proposed Regulation S deal.

Roadshow underway for Datang

China Datang Overseas - part of China Datang Corp., a state-owned power-generation enterprise group - is on a roadshow for an issue of renminbi-denominated notes, a market source said.

Barclays Capital, Morgan Stanley and Deutsche Bank are arranging the marketing trip, which ends Thursday.

Also in the region, Hong Kong-based property developer and manager Swire Properties is planning a non-deal roadshow with HSBC and Standard Chartered, a market source said.

No other details were immediately available on Tuesday.

Development banks on the road

On Tuesday Rio de Janeiro-based Brazilian Development Bank embarked on its own non-deal roadshow, according to an investing source.

A deal will not necessarily materialize, the source said, but the bank does need to come to the market, which should be open to a credit of that quality.

The source added that Santander is "definitely" involved and "may or may not" be the left bookrunner. HSBC, Barclays and Banco do Brasil are almost sure to be involved, the investor added.

Development Bank of Kazakhstan is also hosting a non-deal roadshow this week with JPMorgan and RBS, according to a market source.

PDVSA active

In trading, bonds due 2017 and 2021 from state-run oil company Petroleos de Venezuela SA (PDVSA) were better in very active dealings.

"Those are always active, they're big names," a trader said.

The 9% notes due 2021 moved up a couple of points to 72 to 73 bid on volume of about $74 million.

"That's a pretty big deal," he said.

Meanwhile, the 8½% notes due 2017 firmed to 81 bid, 82 offered on volume of between $20 million and $30 million.

There was no fresh news out on the company, which has bonds that trade in both the high-yield and the emerging markets space.

Paul A. Harris and Paul Deckelman contributed to this article.

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