SM Investments prices $500 million; Argentina sees 5% rally, lifts high-yield Latin America

By Paul A. Harris

St. Louis, Sept. 15 - The EMBI-plus index tightened by 15 bps to end at 328 bps bid, on Tuesday, according to a market source.

Argentine debt rallied by 5% on debt restructuring holdouts' expectations that a better deal might be in the offing, according to Enrque Alvarez, head of research, Latin America, for IDEAglobal.

Meanwhile in the primary market SM Investments Corp., of the Philippines, priced a $500 million issue of five-year paper tight to price talk.

Argentina rallies

Argentine cash bonds gained 5%, while the Argentine component of the EMBI gained 5.2% on Tuesday, according to Alvarez.

The Argentine EMBI was at 749 bps bid at the New York close, 60 bps tighter on the day.

The rally, Alvarez explained, is pegged to statements by Argentina's economic minister, Amado Boudou, that there is a plan to settle with holdouts from the massive 2005 debt restructuring in a manner that will differentiate between the original holdouts and those who picked up what is seen as speculative paper at very low prices.

The perception is that such a deal would work in favor of the former and against the latter, Alvarez said.

More reliable numbers

Also kindling interest in Argentina is the belief that under Boudou's stewardship the country's economic numbers could increasingly become more embedded in reality.

Argentinean economy ministers have had a long faceoff with the market, in which the market maintains that the Argentine government has been doctoring the figures, Alvarez explained.

"There has been a push by [Boudou] to review the figures," the strategist added.

"The latest release of CPI numbers last Friday, though significantly higher than market estimates, hinted that they are starting to adjust their methods, attempting to be somewhat more transparent."

Argentina's 8.28% discount bonds due in 2033 were at 69¼ bid, 69¾ offered at the New York close on Tuesday, up 2½ points, Alvarez said.

The Argentine rally helped push up high-beta Latin America sovereign debt, the IDEAGlobal strategist added.

Ecaudor was up 1.8% on Tuesday, with the Ecuador portion of the EMBI going out 1,011 bps bid, 44 bps tighter.

The Venezuela component of the EMBI was up nearly 2½%, the strategist added.

SM Investments prices $500 million

Philippines-based SM Investments priced a $500 million issue of five-year fixed-rate bonds at par to yield 6% on Tuesday.

The yield printed at the tight end of the 6% to 6¼% price talk.

Barclays Capital and Citigroup ran the books.

The Pasay City, the Philippines-based company owns and develops commercial properties in the retail and tourism sectors.

Naftogaz steady as maturity looms

Despite the fast approaching maturity of the NJSC Naftogaz 8 1/8% notes due Sept. 30, 2009, that paper ended the European session unchanged, according to a trader in London, who spoke just after the close there.

The trader spotted the Naftogaz paper, which matures in just 14 days, at 84 bid, 87 offered, unchanged on a reasonably quiet day, which saw generally better prices on pretty low volumes.

"People don't appear to be in a hurry to sell," the trader said of the Naftogaz 8 1/8% bonds.

"There have been some notes to investors out recently asserting that the mid-80s aren't bad [for the Naftogaz notes], and they should not sell at those levels."

Meanwhile Ukrainian sovereign debt was also unchanged, having stabilized over the past few days, the trader said.

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