Serbia, Vostochny Express, Granvia, Kazakhstan Engineering issue notes; VEB bonds widen

By Christine Van Dusen

Atlanta, Nov. 22 - Serbia, Russia's Vostochny Express Bank, Slovakia's Granvia AS and JSC National Co. Kazakhstan Engineering sold notes on Friday as most emerging markets bonds moved tighter and bank paper from Turkey stood out in trading.

Many Turkish bank bonds moved as much as 22 basis points tighter by the end of the week, a London-based analyst said. Russian bank paper put in a strong week as well.

For example, the 6% notes due 2021 from OJSC Russian Agricultural Bank narrowed 79 bps on the week on the back of news that the lender will receive a capital injection this year, the London-based analyst said.

"A more mixed picture in Russian corporates, although the Vimpelcom curve outperformed," she said.

In other trading on Friday, the new two-tranche issue of notes from Russia's Vnesheconombank (VEB) moved wider, a trader said.

The $2 billion deal included $850 million 4.224% five-year notes that priced at par and $1.15 billion 5.942% notes due in 10 years that priced at par.

"Both are trading 5 bps to 10 bps wider from re-offer," the trader said.

Citigroup, HSBC, JPMorgan and Mitsubishi UFJ Securities were the bookrunners for the Rule 144A and Regulation S deal.

Meanwhile, trading of bonds from the Middle East remained "defensive," a trader said.

"Perpetuals were in demand, as were other subordinated bonds," she said. "Bids were generally solid in the Dubai and Bahrain space."

The recent issue of notes from Saudi Arabia's Saudi Basic Industries Corp. (Sabic) - €750 million 2¾% notes due 2020 that priced at 99.28 - continued to trade "very well," she said.

"There's a continued lack of investment-grade, euro paper out of the Middle East," she said.

Ukraine in focus

Sovereign bonds from Ukraine headed into the end of the week with some lower offers but, in general, a lift, said Svitlana Rusakova of Dragon Capital.

"Quasi-sovereigns held on well without much coming out for sale," she said.

PDVSA gains ground

Bonds from Petroleos de Venezuela SA were active and higher as the week came to a close, with the 8½% notes due 2017 spotted "up close to a point" at 821/4, a trader said.

At least $60 million of the bonds changed hands.

The trader also saw the 9¾% notes due 2035 put on a deuce to close at 72 and the 9% notes due 2021 gained 2½ points, ending at 741/2.

On Thursday, the Venezuelan-based state-owned oil producer said its January to September revenues were nearly $87 billion.

The company, which uses revenues to help prop up the nation's social programs, will make investments of $25 billion by year-end.

On Friday, the company announced that it would be pushing to increase development within the Orinoco heavy oil belt.

Serbia sells notes

In its new deal, Serbia priced $1 billion 5 7/8% notes due 2018 (B1/BB-/BB-) at 98.937 to yield 6 1/8%, or Treasuries plus 476.5 bps, according to a filing from the sovereign and a market source.

The notes were talked at a yield in the 6¼% area.

Citigroup and Deutsche Bank were the bookrunners for the Rule 144A and Regulation S deal.

Vostochny Express prices bonds

Russia's Vostochny Express Bank, through SCI Finance BV (Netherlands), priced $125 million 12% notes due in 2019 at par to yield 12%, a market source said.

Promsvyazbank, Sberbank and BC Region were the bookrunners for the Regulation S deal.

The issuer is a lender based in Khabarovsk, Russia.

Granvia does deal

Also on Friday, Slovakia-based business services and consulting company Granvia priced a €1.24 billion issue of 4.781% notes due on 2039 at par to yield 4.781%, or mid-swaps plus 235 bps, a syndicate source said.

The notes were initially talked at a spread in the 230 bps area.

Deutsche Bank and Natixis were the bookrunners for the Regulation S deal.

The proceeds will be used to refinance existing loans.

The issue is backed by revenue from availability payments from the sovereign.

Deal from Kazakhstan corporate

Kazakhstan Engineering priced its $200 million issue of notes due in 2016 with a coupon of 7½%, according to a filing from bookrunner Halyk Finance.

UBS and VTB Capital were also bookrunners for the Regulation S-only deal.

Other details on the pricing were not immediately available on Friday.

Astana-based Kazakhstan Engineering makes special-purpose products for law enforcement agencies in Kazakhstan, as well as oil and gas and rail equipment.

Deal from BMCE

On Thursday, Morocco's Banque Marocaine du Commerce Exterieur (BMCE Bank) printed a $300 million issue of 6¼% notes due 2018 (Ba1) at 98.947 to yield 6½%, a market source said.

Barclays, BMCE Capital, BNP Paribas and Citigroup were the bookrunners for the Regulation S deal.

In June, the company previously announced plans to issue $500 million notes due in five years. A deal did not materialize.

On Friday the notes traded in the 98 to 99 range, a trader said.

Vneshprombank notes print

Russian Foreign Economic Industrial Bank (Vneshprombank) priced a $25 million add-on to the existing 9% notes due 2017 (B2/B+/) at par to yield 9%, a market source said.

The original $200 million issue also priced at par.

Otkritie Bank and Raiffeisen Bank International were the bookrunners for the Regulation S deal.

The notes were issued by VPB Funding.

The notes include a change-of-control put in the event of a ratings downgrade.

Tap for Panama

Panama priced a $500 million tap of its 5.2% notes due 2020 (expected ratings: Baa2/BBB/BBB) at 107.924 to yield 3¾%, or Treasuries plus 238.8 bps, according to a filing.

Citigroup and JPMorgan were the bookrunners for the Securities and Exchange Commission-registered deal.

The original $1 billion issue priced on Nov. 23, 2009.

Stephanie N. Rotondo contributed to this report.

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