Argentine farmers begin strike; Lebanon's Byblos Bank brings $200 million preferred deal

By Paul A. Harris

St. Louis, Aug. 28 - Emerging markets were basically unchanged on Friday, said sources in Europe and the United States.

"Roughly half of the people I normally converse with are out today," said a trader in England, who was lamenting being the one left at work to stare into "blank screens."

Russian five-year CDS tightened by 7 bps to 272 bps mid, according to another trader, who spoke heading into the European close.

Russia's bonds maturing in 2030 were also 7 bps tighter on the day, the trader added.

OAO Gazprom's five-year CDS were at 367 bps bid, 372 bps offered, 8 bps tighter on the day, said the trader, who pointed out that during the European session the price of a barrel of crude oil went above $73.

The EMBI-Plus index was at 375 bps bid heading into the New York close, 1 bps wider on the day.

Latin America kept an even keel, with prices pretty much the same as where they had been on Thursday, said Enrique Alvarez, head of research, Latin America, for IDEAglobal.

The exception, he said, was Argentina.

Byblos marketing preferreds

In the primary market, Lebanon's Byblos Bank SAL opened the books on a $200 million offering of tier I non-cumulative redeemable series 2009 preferred shares on Friday.

The deal is expected to close on Sept. 9.

The Central Bank of Lebanon approved the transaction on Aug. 19, Byblos said.

Proceeds will be used to increase the Beirut-based full-service banking company's capital.

Argentina agricultural strike begins

Argentine farmers, protesting a presidential veto of tax relief legislation that would have targeted drought-stricken regions of the country, followed through with their threat to strike, on Friday.

"The market did not see this coming, and was overbought to a large degree," Alvarez said.

"Now it has decided to take profits."

Argentina's 8.28% discount bonds due 2033 were at 59 bid, 59¾ offered, up ½ heading into the New York close on Friday, the strategist said.

However the sovereign's discount bonds fell 1½ points on Thursday, and fell 4½ points during the week, Alvarez added.

Korea National Housing starts roadshow Monday

Meanwhile, in other primary news, timing for the Korea National Housing Corp. benchmark-sized dollar-denominated offering of senior unsecured notes (A2/A) surfaced on Friday, a market source said.

The roadshow will start on Monday in Singapore, then move to Hong Kong on Tuesday and wrap up Wednesday in London.

Bank of America Merrill Lynch, Citigroup, Goldman Sachs & Co., Morgan Stanley, Samsung Securities and UBS AG have been mandated to lead the Regulation S-only deal.

A ton of liquidity

Massive amounts of cash need to be put to work throughout the capital markets, sources said on Friday.

With respect to emerging markets, evidence turned up Thursday when $303.2 million of weekly inflows to the dedicated funds were reported by EPFR Global.

It sets up an interesting situation in which investors must decide whether they are going to put cash to work in places such as emerging markets, which have already rallied to a phenomenal extent.

"There is an excess of liquidity around the globe," IDEAGlobal's Alvarez said.

"It appears that's going to be the case for some time to come.

"The problem is that those flows must decide if they are going to buy toward the top. If they do they have to hope for new highs. Otherwise they're going to take a bath.

"Right now, however, everyone is chasing yield."

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