Philippines sets guidance for Samurai; EM grinds tighter in Europe, U.S.; VTB taps banks

By Paul A. Harris

St. Louis, Feb. 17 - Emerging market spreads ground tighter during the European and U.S. trading sessions as stocks were generally better, market sources said.

Emerging market debt was generally 3 to 7 basis points tighter on the day, according to a sellside source from the U.S. East Coast, heading into the afternoon there.

High-beta names outperformed, with Argentina's discount bonds a point better on the day at 65¼ bid, 65½ offered.

Spain sets the tone

New York players arrived at work to news that Spain - one of the tertiary suspects in the recent credit crisis that has befallen the Euro Zone - managed to get a €5 billion 15-year sovereign deal across the finish line, at price talk.

Spain's new 4.65% bonds came at 85 bps over mid-swaps, representing about a 12 bps concession to its existing bonds, a market source said.

"A lot of EM investors seem like they are willing to put the 'Greece' issue to bed," an East Coast-based emerging markets sellside source commented.

"The fact that Spain was able to get the deal done may indicate that things may be stabilizing a bit. However I'm not certain that's the case," the source added.

In any event, the sellsider said, emerging market investors have been putting idle cash to work over the past two days.

Philippines plans Samurai deal

The Republic of the Philippines set guidance for up to ¥100 billion of Samurai bonds at a spread to mid-swaps in the range of 85 bps to 90 bps.

Daiwa Securities Capital Markets, Mitsubishi UFJ Securities and Nomura Securities Co. are leading the deal.

The East Coast buyside source thought timing on the deal could be imminent.

However, at the New York close, a trader there, who focuses on Asian fixed income, was not so sure that pricing of the Philippines Samurai deal is imminent.

Asia was firmer, the trader said, adding that because U.S. Treasuries sold off, spreads came in.

Hutchison Whampoa's bonds due in 2019 were 155 bps bid, 150 bps offered, 5 to 7 bps tighter on the day.

Meanwhile, Asian high-yield paper was largely unchanged on the day, the trader said.

Listrindo Capital BV (PT Cikarang Listrindo)'s 9¼% senior notes due 2015 (Ba2/BB) were unchanged on the day at 102 bid, 103 offered. The Indonesian utility priced a $300 million issue at 99.106 to yield 9½% in January.

"There was not much trading today because everyone was just getting back from Chinese New Year," the trader remarked.

Credit soft in Asia

At Wednesday's Asian close, equities in Asia were better, but the tone in the credit markets was soft, according to a Singapore-based trader.

The topics of interest to Asian fixed-income investors include the credit worthiness of the sovereigns, including Greece and Dubai, the trader added, and suggested that lingering doubts triggered a bit of widening.

"The market is still very much undecided," the trader said, adding that investors remain concerned about broad macroeconomic issues, however the market technicals remain quite positive.

Given that scenario, there could be more choppy trading in the near term, the source said.

VTB eyes dollar deal

The Russian Federation's JSC VTB Bank (Baa1/BBB/BBB) mandated Deutsche Bank, JPMorgan and VTB Capital to lead investor presentations in front of a possible benchmark-sized, dollar-denominated offering of bonds.

The deal is being marketed in accordance with Rule 144A and Regulation S.

A roadshow gets underway on Friday in Los Angeles and continues on Monday in Boston and on Tuesday in New York. The roadshow wraps up on Feb. 24 in London.

Pricing is subject to market conditions.

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