Fed Delay Spurs Bond Sales From Bulgarian Energy to Gazprombank
by Lyubov Pronina
Bulgarian Energy Holding will meet investors next week for a possible debut sale of bonds in euros as emerging-market issuers from OAO Gazprombank (GZPR) to Brazil seize on bets the Federal Reserve will delay tapering stimulus.
State-run Bulgarian Energy hired Citigroup Inc. and Raiffeisen Bank International AG for meetings in Europe from Oct. 28, a person familiar with the plan said today, asking not to be identified because the details are private. The company which controls assets in power, natural gas and coal mining, plans to sell securities after Poland and Romania raised benchmark-sized debt and as Brazil markets 2025 dollar bonds.
Emerging-market issuers are stepping up debt sales amid bets the Fed will delay trimming its billion of monthly asset purchases. Tapering will start in March after the U.S. government shutdown this month slowed fourth-quarter growth, according to a Bloomberg survey. Gazprombank, part owned by state-run OAO Gazprom, is selling 1 billion euros (.4 billion) of five-year bonds, a person familiar with the sale said today.
"Sovereign names will take this window of opportunity to issue now," Regis Chatellier, senior emerging-market sovereign strategist at Societe Generale SA in London, said by e-mail. "I wouldn't be surprised if Hungary and Ukraine come to the market."
Ukraine is monitoring international markets for a potential debt sale, First Deputy Prime Minister Serhiy Arbuzov said Oct. 17 in an interview in Brussels. Hungary is evaluating if conditions may improve further for a foreign-currency debt sale this year, Laszlo Andras Borbely, deputy chief executive officer of the debt agency, told reporters in Budapest Oct. 21.
The average yield on emerging-market sovereign bonds tumbled 77 basis points, or 0.77 percentage point, to 4.8 percent at 4 p.m. in London since a 2013 high on Sept. 5, the Bloomberg USD Emerging Market Sovereign Bond Index (BEMS) shows.
Qatar National Bank SAQ is selling .5 billion of three-and five-year debt today, while Russia's Vneshprombank hired banks to arrange investor meetings from Oct. 29 for potential debut dollar bonds, people familiar with the plans said. Latvia, Pakistan and Honduras also announced plans to sell bonds.
Increasing demand from investors enabled issuers to narrow spreads. Gazprombank priced five-year bonds at 280 basis points over the benchmark midswap rate compared with initial guidance in the low-300 basis-point area, the person said. Industrial Bank of Korea's 500 million-euro sale priced at a spread of 85 basis points over mid swaps, narrower than initial guidance of around 95 basis points, according to a person familiar with the transaction, who asked not to be identified.
"The recovery in investor sentiment is largely U.S. driven," Richard Segal, the head of international credit strategy at Jefferies Group Inc. in London, said in an e-mail.
- » *Bulgarian Hero awarded Queen's Gallantry Medal
- » *Brits Loathe Immigration, Like Immigrants
- » Bulgaria: Bucolic Beauty on the Edge of Europe
- » Sofia, Bulgaria: A Travel Tuesday Of Stately Proportions
- » Ukraine and Bulgaria Show Power of EU Model
- » South Stream Bilateral Deals Breach EU Law, Commission Says