Emerging markets slow on London holiday, Greece activity; Renhe, Fantasia, Cruzeiro on tap

By Christine Van Dusen

Atlanta, May 3 - The holiday in London kept emerging markets quiet on Monday, as did the news that Greece would get €110 billion in financial aid from the International Monetary Fund and the European Union - a bailout some market-watchers say is not big enough.

"It's been very quiet today in emerging markets," a New York-based market source said. "Japan is closed for three days and London is out for May Day, so there's nothing today."

The primary was "very calm," a Europe-based trader said. "Activity was very low."

In general, credits were "relatively unchanged, maybe slightly better bid," he said. "You would think with equities rallying we'd see more appetite for risk, but it's relatively unchanged."

LatAm deals do well

He did see some demand for the recently priced issue of $500 million 7 7/8% notes due 2021 from Pan American Energy LLC, Argentina Branch. The deal, which came to market Friday and priced at 99.137 to yield 7 5/8%, or Treasuries plus 389 basis points, "jumped up about 1 point" by late afternoon in London, he said.

Another deal that saw positive movement on Monday was Fibria Overseas Finance Ltd.'s $750 million 7½% notes due 2020 that priced at 99.136 to yield 7 5/8%, or Treasuries plus 376.8 bps.

By mid-afternoon in New York, that issue was "doing well," the New York-based source said. "It's up 2.5 points."

The day also saw "some talk regarding the debt-exchange reopening of Argentina," the Europe-based source said.

The swap launched Friday and offered a second exchange opportunity to the holders of $20 billion in bonds who didn't participate in a 2005 swap.

On Monday investors from the United States and Europe were permitted to submit bonds for the swap. Investors in Japan will do so on Friday.

The plan also includes a proposed $1 billion in 8¾% global bonds due 2017 via Barclays Capital, Citigroup Global Markets and Deutsche Bank Securities.

"I hear that the bonds are pretty active," the New York source said. "We're just waiting on some clarity on that."

Greece remains priority

And while the primary activity was of note to emerging market investors and issuers, most spent Monday just waiting to see "how the Greece bailout plan is being digested," the New York source said.

After much wrangling and discussion, the financially troubled sovereign is getting a €110 billion three-year bailout from the European Union and the IMF.

"Some brave clients are trying to get exposure to Greece," the European trader said. "But here the story is not over, for sure, I think, because the money granted from the IMF and the E.U. will not be enough."

Primary will pick up

Also on Monday, China's Renhe Commercial Holdings Co. Ltd. set the size for its planned issue of notes at $300 million to $500 million. The deal from the Harbin, China-based developer and operator of underground shopping centers could come to market by the end of the week, a source said.

The week will also likely see pricing from Hong Kong-based Fantasia Holdings Group Co. Ltd. on its planned five-year senior notes via Citigroup, Merrill Lynch International and UBS AG.

"That should price by mid-week," an informed market source said.

Another deal that could come this week is an issue of five-year notes from Brazil's Banco Cruzeiro do Sul. "That could come Thursday or Friday," the source said.

Next week is expected to bring Hong Kong-based MCE Finance Ltd's $600 million senior notes due 2018, according to a market source. A roadshow runs until May 10, and pricing is expected the following day.

"Today is unusually quiet," the New York source said. "May is typically a very busy month. The market is still kind of digesting the news from Goldman Sachs, new bank regulations plus what's going on in Europe. So there are a couple of different land mines out there."

But as last week's fairly steady pace of issuance showed, "new issues continue to get done," he said. "If it's priced right and it's the right name, the deals are getting done."

Renhe's notes may total $500 million

The expected issue of senior notes from China's Renhe Commercial Holdings will likely total between $300 million and $500 million, and the deal could price "toward the end of the week," a market source said.

Bank of America Merrill Lynch, BOC International, JPMorgan and UBS are the bookrunners for the Rule 144A and Regulation S deal.

Proceeds will be used to finance existing projects, to acquire and develop new projects and for working capital.

Cruzeiro plans bonds

Brazil's Banco Cruzeiro do Sul (Ba2) plans to issue five-year notes and could price the deal on Thursday or Friday, an informed market source said.

The bookrunners for the offering are Bank of America Merrill Lynch, BCP Securities and UBS.

Banco Cruzeiro is a Sao Paulo-based lender.

MCE on roadshow

MCE Finance began a global roadshow on Monday for its $600 million offering of eight-year senior notes (B1/B+), according to an informed source.

Presentations are scheduled for Singapore, Hong Kong and London on Monday and Tuesday.

A roadshow in the United States begins on Thursday. A general investor call is scheduled for Friday.

The U.S. roadshow ends on May 10. The Rule 144A and Regulation S with registration rights offering is scheduled to price on May 11.

Deutsche Bank Securities, Bank of America Merrill Lynch, RBS Investment Bank, ANZ Investment Bank, Barclays Capital, Citigroup, Commerz, Credit Agricole, NAB Securities and UBS Investment Bank are the joint bookrunners.

The notes come with four years of call protection.

Proceeds will be used to reduce debt under the company's City of Dreams project facility.

The issuing entity is a financing unit of Melco Crown Entertainment Ltd., a Hong Kong-based developer, owner and - through a Macau subsidiary that holds a gaming sub-concession - an operator of casino gaming and entertainment casino resort facilities focused on the Macau market.

Paul A. Harris contributed to this report

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