Emerging markets activity slows; Poland prices; Alfa, Romania and Daycoval could be next

By Christine Van Dusen

Atlanta, March 9 - Emerging markets were so slow on Tuesday that one New York-based trader called it "the quietest day so far this year."

Investors and issuers were, for the most part, "taking a much-needed breather," he said. "Into next week, I think things will continue to be firm, quiet but firm. Everyone is standing on the fence to see more indication of whether they should rally or sell off in the next coming of days."

One notable exception was Poland, which on Tuesday priced CHF 475 million 2 1/8% bonds due 2014 at mid-swaps plus 88 basis points, according to an emerging markets strategist.

"We're all recovering from the concerns over Greece," the strategist said. "That should be safely behind us - for now, at least."

As a result of this and the fact that "investors are flush with cash," the strategist said, "we're expecting further deals in the coming weeks."

Up next he expects to see Russia's Alfa MTN Issuance Ltd., which on Monday set price talk at 8¼% to 8½% for its expected benchmark-sized senior unsecured notes. The market may also soon see the expected benchmark-sized euro-denominated bonds from Romania, brought by Deutsche Bank, EFG Eurobank and HSBC.

Also on tap are a dollar-denominated issue of senior notes due 2015 from Brazil's Banco Daycoval, which set price talk at 7% on Monday, and a dollar-denominated issue of senior unsecured bonds from CLP Power Hong Kong Financing Ltd. brought by Barclays Capital, Citi, HSBC and Standard Chartered. That deal ends its roadshow on Friday.

Another roadshow, this one from Terphane Inc., will start on Monday for $90 million secured notes due 2017 for the polyester films manufacturer based in Bloomfield, N.Y., and Sao Paulo.

But at the moment, "no one really has strong convictions," the trader said. "Accounts aren't changing. Dealers are not prepared to short the market because they could get squeezed out pretty easily. So everyone's just waiting."

Secondary mixed

On the secondary side "Russia and Gazprom were strong this morning" following Monday's Russian holiday, a London-based market source said. He also noted some profit-taking in the Middle East region as Dubai World worked on its plan for restructuring $26 billion in debt and sought to delay paying its lenders.

"The five-year Dubai traded at 480," he said. "Now it's bid there."

Otherwise, heading toward the European close, the secondary was quiet, he said.

Case in point: Monday's deal from South Korea's Shinhan Bank - $700 million 4 3/8% unsecured notes due 2015 priced at 99.84 to yield 4.408%, or Treasuries plus 205 bps - didn't move much on Tuesday. By mid-afternoon in New York, it was "up a quarter point," the emerging markets strategist said. "That's kind of meaningless."

Poland prices franc deal

Poland priced CHF 475 million 2 1/8% bonds due 2014 at mid-swaps plus 88 bps, according to a market source.

The bookrunners for the deal are UBS AG and Royal Bank of Scotland Group.

Terphane plans roadshow

Terphane will begin a roadshow on Monday for its $90 million offering of seven-year secured notes, according to a market source.

PrinceRidge Group is the bookrunner for the Rule 144A for life deal.

The notes come with four years of call protection.

Proceeds will be used to refinance the company's Libor plus 970 bps secured notes and 12½% secured notes.

Terphane is a polyester films manufacturer based in Bloomfield, N.Y., and Sao Paulo.

Paul A. Harris contributed to this report

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