Emerging markets' rebound boosts primary; Asian, Russian deals price; Latin America quiet

By Christine Van Dusen

Atlanta, May 13 - Though concerns about Greece and the global economic crisis remained on Thursday, the high anxiety seemed to calm a bit, bringing several emerging markets issuers out of hiding and encouraging some positive activity in the secondary, market sources said.

"It's kind of a mixed bag," an emerging markets strategist said. "It seems to still be in recovery mode, even though equity indices are flat in developed markets. Nevertheless, EM is making headway."

The JPMorgan Emerging Markets Bond Index Global's spread was tighter by 7 basis points, "up about ¼%, and that's despite some negative pressure on U.S. Treasuries," he said.

The higher-beta credits were "doing well," he said. While the Philippines was flat, Mexico was up 0.4% and Venezuela rose almost 2%, he said.

"I would say the market, generally speaking, is OK," said a New York-based market source. "It's not great, but it's not terrible."

What we're seeing is "follow-through from yesterday," the strategist said. "I think the later-day rally took European investors a little bit by surprise; by the European close most of the bourses there were fairly flat or slightly negative. So when the U.S. rebounded a little more strongly in the second half of the day, now we're seeing investors playing catch-up to that."

Uncertainty about Argentina's bonds

Argentina was up about 1¼% and tighter by 36 bps, even as the sovereign remained under scrutiny regarding the possible delay or cancellation of its planned $1 billion issue of 8¾% seven-year bonds.

"That bond issue is going to depend on market issues, and if they can obtain the price for it," the strategist said. "The bonds have rallied sharply but have not returned to sort of mid-April levels yet, so it's touch and go when it comes to that. They may just wait to see if the markets continue to recover."

Said the New York-based source, "It's tough to say how it will all work out. I haven't heard a lot of chatter."

Overall, Latin America - previously a hot zone for new issuance - was cold on Thursday in the primary.

"There's nothing out of that region," the New York-based market source said. "But I expect they'll find their footing and will reemerge."

Primary picks up

Other regions picked up the slack.

Kazakhstan's JSC National Atomic Co. (Kazatomprom) priced $500 million 6¼% notes due 2015 at 98.947 to yield 6½%, or Treasuries plus 424 bps, according to a market source.

And Russia's Credit Europe Bank priced $300 million notes due 2015 at par to yield 7¾%, or 660 bps over mid-swaps.

China's Renhe Commercial Holdings Co. Ltd. priced $300 million 11¾% senior notes due 2015 at 99.08 to yield 12%, or Treasuries plus 974.1 bps.

And Korea Resources Corp. sold $300 million 4 1/8% notes due 2015 at 99.513 to yield Treasuries plus 197.5 bps.

"Asia and Central Asian credits seem to be able to tap markets," the strategist said. "The Asian bonds and Asian corporates seem to have better access."

But really, "the markets are open for the right credit at the right price," he said. "At least deals are getting done."

Kazatomprom prices notes

Kazatomprom priced $500 million 6¼% notes due May 20, 2015 (Baa3//BBB-) at 98.947 to yield 6½%, or Treasuries plus 424 bps, according to a market source.

The yield was talked at the 7% area.

BNP and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal, which includes a change-of-status put at 101%.

Proceeds will be used for general corporate purposes.

Kazatomprom is a Kazakhstan government-owned nuclear holding company.

Credit Europe Bank sells notes

Russia's Credit Europe Bank priced $300 million notes due 2015 at par to yield 7¾%, or 660 bps over mid-swaps, according to a market source.

Citibank was the bookrunner for the Regulation S-only deal, which includes a put at par on the second anniversary.

The deal was talked with a yield in the 7¾% to 8% area.

Credit Europe Bank is a lender controlled by Turkey's FIBA Group, a financial conglomerate.

Renhe Commercial prices notes

China's Renhe Commercial Holdings priced $300 million 11¾% senior notes due May 18, 2015 (Ba2/BB/) at 99.08 to yield 12%, or Treasuries plus 974.1 bps, a market source said.

Bank of America Merrill Lynch, BOC International and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal, which is non-callable for three years.

The deal was talked at the 12% area.

Proceeds will be used to finance existing projects, to acquire and develop new projects and for working capital.

Renhe Commercial is a Harbin, China-based developer and operator of underground shopping centers.

Korea Resources prices notes

Korea Resources priced $300 million 4 1/8% notes due 2015 at 99.513 to yield Treasuries plus 197.5 bps, according to a market source.

HSBC, Morgan Stanley, Standard Chartered Bank and Korea Development Bank were the bookrunners for the Regulation S-only deal.

Proceeds will be used for general corporate purposes.

Korea Resources is owned by the Korean government and implements national mineral resources-related policies.

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