Middle East recovers some losses; Nakheel down again; overall market flat; Lebanon launches

By Paul Deckelman, Paul A. Harris and Christine Van Dusen

St. Louis, Nov. 30 - Emerging markets were flat, heading into the middle of the New York afternoon, according to a emerging debt capital markets syndicate banker.

While facts were is short supply, the market buzzed with talk of Dubai World's plans to restructure as much as $22 billion of debt, the source added.

Clarity on the situation might not surface until next week, because the government of Dubai will be on holiday until Dec. 6.

While the most tangible impact of that news was being felt in Middle Eastern debt securities, the broad market spent the New York session flat to slightly wider, the banker said.

Generally names from the Middle East were better, with the notable exception of Nakheel Development, the issuer at the center of the current troubles, which continued to lose ground.

Middle Eastern CDS get a bounce

Although there was no apparent clarity on the Dubai World situation, Middle Eastern debt rebounded slightly from last week's massive sell-off.

Emirate of Dubai five-year CDS were at 571.40 bps mid, at the New York open, 11.75 bps tighter from the European open.

The Dubai CDS closed at 647 bps mid on Friday, wider by 105 bps on the day, and massively wider than the 317 bps mid last Tuesday.

Emirate of Abu Dhabi five-year CDS were at 144.125 bps mid at the European close, having tightened by 18 bps during that session.

Saudi Arabia CDS were at 99.95 bps mid, 9.625 bps tighter.

Qatar CDS were at 109.875 bps mid, 8.75 bps tighter.

New Qatar debt held in

The State of Qatar's recently priced $7 billion of senior fixed-rate notes, spread across three tranches, were all holding in around par during the New York afternoon on Monday, according to a market source.

However, Abu Dhabi Commercial Bank PJSC's $1 billion of 4¾% five-year senior notes, which priced at 99.596 in late October, were at 88 bid, 89 offered on Monday afternoon in New York.

Meanwhile a trader said that Nakheel Development was "the name of the day," and quoted its 3.1725% euro-denominated notes coming due on Dec. 11, 2009 as having slid to 58-60, versus 110 bid last week before the Dubai announcement, and from the lower 80s at the end of last week.

The bonds got as low as 55 Monday, before coming off those lows to end at 58-60.

Lebanon launches $500 million

The Republic of Lebanon (B2/B-/B-) launched a $500 million two-part notes offer on Monday, according to market sources.

The Regulation S deal is comprised of a $250 million tranche of 5 7/8% notes due Jan. 15, 2015 and a $250 million tranche of 7% notes due Dec. 3, 2024.

Bank of Beirut, Citigroup and SG Corporate & Investment Banking are managing the deal.

Pricing was believed to be imminent, an emerging debt capital markets banker said shortly after the New York mid-day.

However no terms had circulated the market as the U.S. East Coast session came to a close.

The deal was launched with a Dec. 3 settlement date.

Agrokor talks €400 million notes

Elsewhere, Croatia's Agrokor DD set price guidance Monday at the 10½% area on its planned €400 million issue of senior notes due 2016 (B2/B).

BNP Paribas and UniCredit are the bookrunners for the debt refinancing deal, which is expected to price by Wednesday.

A little reluctance

Clarity as to the impact that the Dubai World news will ultimately have on emerging markets might begin to surface during the next two days, a syndicate banker in New York said on Monday.

After all, the massive selloff of Middle Eastern debt which took place late last week, did so as nearly all the U.S. players were on the sidelines celebrating Thanksgiving during what was effectively a four-day holiday weekend, the source reasoned.

Volumes, therefore, were extremely light, and a few trades had the power to move the needle a good deal.

Nevertheless, the news out of the Middle East is apt to generate a little more reluctance on the part of investors, especially with respect to the new issue market, the banker said.

"People are trying to protect their gains," the sell-sider remarked.

"And this is just another reason why they should be hesitant to jump into new issues."

Nevertheless, deals are possible this week, the New York-based banker said.

"For issuers it's a question of concessions and volatility.

"It remains to be seen whether the Dubai news is going to be enough to make people wait until January.

"There should be some clarity on that by Tuesday or Wednesday, after we see how the market does on regular volume."

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