Emerging market debt sees illiquid day; Ecuador slips on election jitters; Korea to hit the road

By Reshmi Basu and Paul A. Harris

New York, Nov. 22 - Emerging market debt clocked in a quiet session Wednesday while Ecuador saw its bonds slide ahead of Sunday's presidential election.

But while the secondary market knocked off early, the primary market roared ahead as one sovereign announced its plans to hit the road and several corporates snuck in deals at the end of an abbreviated trading week in the United States. U.S. markets were scheduled to be closed Thursday for the Thanksgiving holiday and to have a half-day session on Friday, although few people were expected to show up at their desks.

Adding to the pipeline, the Republic of Korea will begin a roadshow in the coming week for a benchmark-sized offering of dollar-denominated and euro-denominated bonds.

The roadshow will make stops in Hong Kong, Paris and London.

Barclays Capital, Citigroup, Credit Suisse and Korea Development Bank are joint bookrunners for the offering of notes, which have been registered with the Securities and Exchange Commission.

Meanwhile the announcement of new supply had a negligible impact on the country's bonds, according to a market source.

In trading, the Korean bond due 2014 added 0.06 to 97.646 bid, 97.897 offered.

In other pipeline news, Thai wireless telecommunications company, True Move Co. Ltd., was set to start a roadshow for its $450 million offering of senior notes on Thursday, Nov. 23 in Singapore.

The notes, which are expected to come with a seven-year tenor and four years of call protection, will subsequently be shopped in Europe and the United States.

Citigroup and Deutsche Bank are joint bookrunners for the Rule 144A/Regulation S offering.

And the government of Barbados set price guidance for a retap of its 6 5/8% bonds (Baa2/BB+) due 2035 at Treasuries plus 185 to 195 basis points.

The country plans to issue $65 million of the new bonds, which would bring the total size of the deal to $190 million.

Deutsche Bank is the lead manager for the Rule 144A/Regulation S deal.

Deluge of new issues

Wednesday saw several issuers bombard the market.

Out of Korea, Kookmin Bank placed a $500 million issue of floating-rate notes (A3/A-) at par to yield Libor plus 25 basis points.

The deal came at the tight end of price guidance, which was set at 25 to 26 basis points.

Citigroup, Goldman Sachs & Co. and HSBC were joint bookrunners for the Regulation S transaction, which comes off the issuer's global medium term note program.

From Ukraine, poultry producer OJSC Myronivsky Hliboproduct (MHP) priced an offering of $250 million in five-year senior notes (B2//B) at par to yield 10 ¼%.

The deal came at the tight end of price talk, which was set at 10¼% to 10½%.

Morgan Stanley and ABN Amro led the Rule 144A/Regulation S deal.

Next Russian Standard Finance SA, a subsidiary of CJSC Russian Standard Bank, sold a $200 million offering of 10-year fixed-rate loan participation notes (expected ratings Ba3/B-) at par to yield 9¾% via Citigroup and ABN Amro.

The deal came at the wide end of price guidance, which was set at 9½% to 9¾%.

Additionally, the notes come with five years of call protection. If they are not called at that time, the coupon will step up by 150 basis points.

Elsewhere Argentine credit card issuer Tarjeta Naranja SA sold $100 million equivalent in senior unsecured Argentine peso-denominated notes (//B).

The amortizing notes due 2011 priced at par to yield 15.50%.

Citigroup was the bookrunner for the Regulation S transaction.

Ecuador down on politics, oil

With the exceptions of Ecuador and Lebanon, emerging market debt was mostly unchanged as many shops closed early ahead of the long holiday weekend in the United States.

During an illiquid session, the bellwether Brazilian bond due 2040 inched lower by 0.05 to 132.35 bid, 132.40 offered while the Russian bond due 2030 gained 0.38 to 112.375 bid, 112.875 offered.

However Ecuador and Lebanon bucked the market's overall trend as both nations emerged as losers on political uncertainty.

In Ecuador, the most recent polls suggested a tight race between market-friendly candidate Alvaro Noboa and radical leftist Rafael Correa.

On Tuesday, the Andean nation saw its sovereign move to higher levels, assisted somewhat by a spike in oil prices. But Wednesday saw investors unwind positions ahead of Sunday's presidential run-off election, according to a market source.

As oil prices slumped more than $1 a barrel during the session, there was no cushion for the politically unstable country.

In the secondary, its bond due 2015 gave up 0.90 to 106.86 bid, 107.10 offered while the bond due 2030 lost 0.65 to 99.35 bid, 99.85 offered.

Elsewhere, Lebanese debt saw intense fallout resulting from the assassination of the country's Christian cabinet minister Pierre Gemayel.

Following Tuesday's murder of the outspoken critic of Syria, Moody's changed the rating outlook on the country's debt to negative from stable, citing the country's unstable political environment.

And on Wednesday, Standard & Poor's followed suit. The ratings agency issued a statement in which it said that the recent killing reinforced the negative outlook it assigned in September.

"The collapse of the government, a descent into sectarian violence or significant capital flight from the banking system would trigger the immediate lowering of the ratings on Lebanon," the agency added.

Amid the political volatility, Lebanese paper did not fare well, noted a trader. During the session, the country's bonds due 2008 gave up 1 point to 102 bid, 103 offered while its bonds due 2016 plunged 3 points to 96 bid, 98 offered.

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