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CIS & EM Debt Market Pipeline - more on the road

November 28, 2012
http://em.cbonds.com/comments/download/88169

Russian Domestic Market Pulse

Debt market is once again buzzing with action. 17 issuers are marketing their bonds. Sub-federal sector is waking up. Saint-Petersburg returns to the market after a long break with a 25039 issue of up to $ 7 bln. The city will decide on the final size before November 28. The issue has a tenor of 4 1/2 years. The issue will be sold via auction, at which the first coupon rate will be set. The city traditionally decided not to involve investment banks. Energocapital has been appointed the technical broker, whose functions are limited to entering bids in the Stock Exchange. NSD is the depository. It will be the first time the city sells bonds on MICEX, in stead of St. Petersburg Currency Exchange.
Last week, Republic of Bashkortostan was collecting bids for 4-year bonds (series 34007) totaling $ 3 bln. First coupon guidance was 8.65%8.95%, which corresponded to a yield to maturity of 8.93%-9.25% p.a. The offering is scheduled for December 4.
Tomsk will be competing for investor attention at the same time. The city is preparing to place series 34004 bonds worth $ 1 bln on December 4. The issue matures in 4 years. First coupon rate will be set at the auction. Rate guidance is 9.5% - 9.8% per annum. Krasnodar Region continues selling additional bonds of series 34004.
Corporate sector had little to offer last week. Bank ZENIT bought back BO-03 bonds for a total of RUR 1.056 bln at par under a put option. On the same day, the issuer placed all these bonds on the secondary market. Thus, the amount of outstanding BO-03 bonds of Bank ZENIT remained unchanged at RUR 3 bln. Rosgosstrakh has joined ZENIT this week with a secondary offering of up to RUR 3.75 bln in series 02 bonds in the secondary market.
VTB Capital Finance will sell series 02 bonds in amount of $ 1 bln tied to the price of gold. In parallel, the bank is taking bids for series 03 bonds of the same amount, with MICEX index as an underlying asset. On November 27, Mortgage Agent of ITB 1 will be offering mortgage-backed bonds of class "A" and "B" for a total of RUR 3.33 bln. DeltaCredit is placing backed bonds (series 09-IP) worth $ 5 bln.


CIS Domestic Market Pulse

Ukraine's Finance Ministry held an auction of government bonds on November 20. This time, in addition to the traditional five-year UAH-denominated paper, the agency offered two-year domestic bonds in US dollars. The first issue was sold according to the traditional procedure: The Ministry received and met two bids for a total of 500 million, with a yield of 14.3% p.a. Dollar-denominated paper generated more interest in the investor community. 15 of the 16 primary dealers of government bonds participated in the auction. The bids totalled USD 120 mln in the yield range of 8-9.3%. After a successful sale of Eurobonds, Finance Ministry was not prepared to overpay, and met 8 bids for $ 74 mln. The rate was set closer to the bottom of the range at 8.32% per annum.
This week, Finance Ministry of Belarus is road-showing eurobonds in Singapore and Hong Kong. The target issue size is $ 500-600 million. VTB Capital and Sberbank CIB are the Arrangers.
On Friday, VTB Bank (Belarus) plans to start selling domestic bonds worth BYR 150 bln with a tenor of six years. The issue offers a coupon equal to National Bank's overnight deposit rate plus six percentage points. Coupon guidance is 26% per annum. Refinancing rate in Belarus remains at 30% p.a. National Bank sees no opportunity to change it in the short term. Chairman of the National Bank Nadezhda Yermakova says that the refinancing rate will not change in November. Meanwhile, rates on the interbank credit market fell to 40% p.a. Belagroprombank was the main buyer of ruble resources.
In Kazakhstan, Centras Securities held two successful bond auctions of Kazakh issuers. SevKazEnergo placed bonds maturing in 2020 in amount of 1.6 bln tenge at 9.5%. On Friday, Eximbank Kazakhstan sold bonds maturing in 2015 worth 1 bln tenge to yield 9.5% p.a. This week, investors are expecting auctions from SevKazEnergo and Food Contract Corporation.
Central Bank of Azerbaijan placed short-term bonds in amount of AZN 10 million for 28 days. Compared to the previous offering, the yield has grown from 2.85% to 3.07% per annum. Management licenses of Unicapital and Standard Kapital have been suspended, as they expired and the companies did not apply for their extension. Thus, today in Azerbaijan 15 companies have brokerage licenses, 14 have dealership licenses, and 2 are licensed to maintain a securities register.

CIS eurobond Market Pulse

Two Russian banks placed Eurobonds last week. AK BARS Bank tapped the market with 3-year Eurobonds worth $ 500 million at 8.75% p.a. Credit Suisse and VTB Capital were the Arrangers. VTB placed the fifth 1-year ECP tranche in amount of $ 13.5 mln. TCS Bank announced plans to offer subordinated Eurobonds.
In CIS market, Belarus has mandated VTB Capital and Sberbank CIB to arrange the proposed Eurobond issue, and proceeded with a road-show in Singapore and Hong Kong.
Last Monday, Ukraine sold ten-year Eurobonds worth $ 1.25 bln at 7.8%. Spread over 10-yr. UST was 618.7 bp. Arrangers were JP Morgan, Morgan Stanley, Sberbank CIB and VTB Capital. It is assumed that the sovereign issue will pave the way to international debt markets for quasi-sovereign issuers including Fininpro and Ukrzaliznytsya. The city of Kyiv repaid its $250m eurobond.
On Nov 26, Development Bank of Kazakhstan placed new 10-year eurobonds worth $1bn after having bought back $500m of its eurobonds due 2015. JP Morgan, VTB Capital, Halyk Finance arranged the deal. The new 4.125% notes were priced at 98.382% to yield 4.326%.
On Nov 29, FGC UES (Federal Grid) will start a road show for a ruble-denominated eurobond under its RUB 100bn EMTN programme, with Barclays, Sberbank CIB, VTB Capital, Gazprombank, and Morgan Stanley as lead managers.
The market is waiting for Rosneft to announce new deals under its $10 bn programme.