EM pipeline stays active with new deals from Braskem, Wharf, CAF; bond fund inflows rise

By Christine Van Dusen

Atlanta, Feb. 3 - Brazil's Braskem Finance Ltd., Hong Kong's Wharf Finance Ltd. and Venezuela's Corporacion Andina de Fomento kept the new issue pipeline flowing on Friday, pricing notes amid continued positive sentiment and risk appetite from emerging markets investors.

"Risky assets continue to rally," according to a report from Barclays Capital Markets. "Investors have grown more confident that global economic activity is stabilizing ...While structural problems in Europe should linger for a while and caution is warranted we expect the European Central Bank injections of liquidity to keep risk sentiment in healing mode."

In trading on Friday, most names from Africa finished off a fairly solid week on strong footing, a trader said.

"Africa Bank continues to tick along nicely," a trader said. "Eskom Holdings has paper around after a good run. It was a decent day for Firstrand."

Ukraine saw little trading on Friday, he said.

"Ukraine is content to sit this one out without trading, which is helping it to outperform," a London-based trader said. "Turkey is also trading well, with both the new Yapi ve Kredi Bankasi AS and sovereign seeing demand. Garanti Bankasi AS is still, inexplicably, underperforming."

One trader was watching the recent $500 million issue of 5.45% notes due 2017 from the State Oil Co. of the Azerbaijan Republic (Socar) that priced this week at par via Citigroup, Deutsche Bank and RBS in a Regulation S deal.

"Even the mighty Socar deal is coming under pressure, as it's now only 45 basis points over Gazprom," he said.

Also in focus was the $750 million issue of 5 3/8% notes due 2017 that Russia's VEB Finance plc priced Thursday at par to yield Treasuries plus 466.3 bps with bookrunners BNP Paribas, JPMorgan, Morgan Stanley and RBS.

"The new VEB five-year still looks 25 bps cheap to the curve, but simply the weight of supply means it's heavy, much like the tapped Sberbank curve."

For a Friday, the market was "impressively active," the London trader said.

"But then again, with issuers trying to turn our market into some kind of bond foie gras, it's not surprising we are busy shoveling new bonds into the retail buyers who support this market."

MAF notes trade up

The recent $400 million five-year sukuk notes from MAF Sukuk Ltd. - a unit of Dubai-based developer Majid Al-Futtaim Holding - that priced at par were seen trading Friday at 100.81 bid, 101.06 offered after doing the most work on Thursday between 100.85 and 101, a trader said.

Also from the Middle East, Aldar Properties' 2014s opened at 110 bid, 110.50 offered, unchanged on the week, spread-wise.

And HSBC Middle East's 3% 2015 notes were trading at 100.10 bid, 100.25 offered while its 3.575% 2016s were quoted at 101.50 bid, 102 offered.

"Better buyers for the 2015s," he said.

Braskem, Wharf print notes

In its new deal, Braskem Finance - a unit of Brazil-based petrochemical company Braskem - priced a $750 million add-on to its existing 5¾% notes due April 15, 2021 at 98.14 to yield Treasuries plus 243.3 bps, a market source said.

Citigroup, Deutsche Bank and Santander were the bookrunners for the Rule 144A and Regulation S notes.

The initial issue totaled $750 million. A $250 million add-on priced on Jan. 26.

And Hong Kong's Wharf Finance priced a $300 million tap of its 4 5/8% notes due Feb. 8, 2017 at 100.266 to yield 4.565%, or Treasuries plus 385 bps.

HSBC, JPMorgan and Standard Chartered Bank were the bookrunners for the Regulation S deal.

The original issue totaled $600 million and priced at 99.515 to yield 4.725%.

The notes are guaranteed by Wharf (Holdings) Ltd., a Hong Kong-based conglomerate.

CAF does deal

Also on Friday, Venezuela-based lender CAF priced an upsized CHF 125 million issue of senior notes due Feb. 24, 2014 at par to yield Libor plus 125 bps, a market source said.

BNP Paribas was the bookrunner for the deal, which was initially expected to total CHF 100 million.

And Brazil-based food processing company Minerva SA set price talk at the 12 7/8% area for its planned issue of $250 million to $300 million senior notes due 2022 (B2/B/B+), a market source said.

BTG Pactual, Goldman Sachs and Itau BBA are the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used for debt refinancing.

The notes are non-callable for five years and include a change-of-control put at 101%.

Virgolino, Cabei sell bonds

This news followed the late-Thursday pricing of Brazil-based sugar and ethanol producer Grupo Virgolino de Oliveira SA's $300 million issue of 11¾% notes due Feb. 9, 2022, which came to the market at 98.566 to yield 12%.

BTG Pactual, Credit Suisse and Itau were the bookrunners for the Rule 144A and Regulation S notes. Proceeds will be used for debt refinancing, capital expenditures and general corporate purposes.

And Honduras-based microfinance lender Central American Bank for Economic Integration (Cabei) priced a $250 million issue of 3 7/8% senior notes due Feb. 9, 2017 at 99.104 to yield Treasuries plus 336.6 bps, a market source said.

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

Cabcorp, Busan, Lotte price

Guatemala-based beverage products company Central American Bottling Corp. (Cabcorp) priced a $200 million issue of 6¾% notes due Feb. 9, 2022 at 98.23 to yield 7%.

Citigroup was the bookrunner for the Rule 144A and Regulation S deal.

South Korea-based lender Busan Bank priced a $300 million issue of 4 1/8% notes due Feb. 9, 2017 at 99.331 to yield 4.275%, or Treasuries plus 355 bps, a market source said.

Citigroup, Credit Agricole and UBS were the bookrunners for the Regulation S-only deal.

Also from South Korea, Lotte Shopping Business Management (Hong Kong) Ltd. priced RMB 750 million 4% notes due Feb. 9, 2015 at par to yield 4% via Deutsche Bank and HSBC.

Proceeds will be used for general corporate purposes.

The notes are guaranteed by parent Lotte Shopping Co. Ltd., a Seoul, South Korea-based retail company.

Bond fund inflows rise

Emerging markets bond funds saw inflows of $1.15 billion for the week ended Feb. 1, marking a 26-week high, according to data tracker EPFR Global.

"Flows have again proved a good indicator of investor sentiment," said EPFR global managing director Brad Durham.

The previous week, EM bond funds saw inflows of $907 million.

"Flows into emerging markets bond funds favored funds with hard currency mandates by an almost three-to-one margin despite concerns about the trajectory of the US dollar and the euro," according to EPFR's report.

Investors continued to lean toward funds focused on emerging Asia, though interest in Latin American funds has perked up, the report said.

"Corporate bonds are also attracting solid interest," EPFR said. "Europe corporate bond funds attracted fresh money (for) the fifth consecutive week and emerging markets corporate bond funds posted their biggest inflow in over eight months."

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