Poland taps bookrunners; Ukraine bonds dip again; EM spreads tighten; YPF sets talk

By Christine Van Dusen

Atlanta, Dec. 16 - Argentina's Yacimientos Petroliferos Fiscales (YPF) set talk for a dollar deal on Monday as emerging markets bond spreads tightened and buyers emerged ahead of the Federal Open Market Committee meeting.

"This week will see the FOMC meeting with a decision on Wednesday and the possibility for tapering, although consensus forecasts generally favor no change this month," a London-based analyst said. "This morning, U.S. Treasuries have rallied on the back of weaker-than-expected Chinese manufacturing price manufacturing data."

The 10-year Treasury was spotted at 2.85% on Monday morning, and the Markit iTraxx SovX CEEME ex-EU index spread opened at 318.2 basis points over Treasuries, slightly narrower than Thursday's 319.5 bps spread.

The Markit iTraxx Crossover index spread - seen Thursday at 255 bps over Treasuries - narrowed 5 bps to a 250 bps spread on Monday.

"We continue to see buyers as we approach the year-end, although activity is easing," the analyst said.

Bonds from Ukraine - which saw solid demand across the curve on Friday - moved down a ½ point in trading on Monday morning as turmoil continued for the sovereign.

"In Ukraine, the European Union has halted negotiations on a potential deal, with reports suggesting it was due to financial aid demands," the analyst said.

Bonds from the State Administration of Railway Transport of Ukraine (Ukrzaliznytsia) entered the week firmer at 82 bid, 84 offered.

"Not much activity and liquidity in corporates," said Svitlana Rusakova of Dragon Capital.

In other trading on Monday, bonds from Turkey performed in line with Treasuries, a trader said.

YPF gives guidance

Argentina-based petroleum and natural gas company YPF set talk at 9% for its upcoming issue of $500 million notes due in five years, a market source said.

The issuer was initially expected to bring to market a $300 million issue of notes.

Itau Unibanco and Morgan Stanley are the bookrunners for the deal.

Poland picks banks

Also on Monday, Poland mandated Barclays, Citigroup and Goldman Sachs as bookrunners for a dollar-denominated issue of notes, a market source said.

The notes are expected to price in the first quarter of 2014.

This is part of a larger borrowing plan for the sovereign, which will also include two bond issues per month in the first quarter, most likely in local currency, according to a report from Commerzbank.

"The government intends to complete the entire amount by July 2014," the report said, noting that 20% has been pre-financed.

Meanwhile, the primary market was quiet on Monday, in advance of the Christmas holiday.

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