Emerging markets quiet, firm; Senegal could price sovereigns Friday; Telekom Slovenije prices

By Christine Van Dusen

Atlanta, Dec. 10 - Emerging markets were hushed Thursday as investors and issuers looked ahead to year-end and continued to feel some concern over how widespread the fallout would be from Dubai's planned restructuring of $26 billion in debt, market sources said.

"It's very quiet, and firmer," a London-based trader said.

And though the tone on Thursday was "a little better in the Middle East region," a London-based market source said, there remained some persistent nervousness over Dubai's difficulties.

"Dubai is still lurking," a New York-based market source said. "It's like we know what's out there but we need to see just how the information is managed. I do think there is potential risk still lurking out there."

That, plus the time of year, means a planned dollar-denominated benchmark-sized deal from the Dominican Republic and Latvia's planned euro-denominated offering of notes could be put on hold until 2010, the source said.

"But it really remains to be seen," he said. "I do think things are going to very quiet through the end of the year. Most of the deals that were out there got done."

He pointed to three Mexico-based issues that priced this week: Sinaloa-based homebuilder Desarrolladora Homex SAB de CV's $250 million 9.5% notes, Nuevo Leon-based food products company Sigma Alimentos SA de CV's $250 million issue and Monterrey-based building materials company Cemex Finance's two-tranche benchmark offering.

Another recent issue, the $200 million 9¼% notes due 2012 that priced at par from Russian finance company Nomos Capital OJSC, looked "fairly liquid" on Thursday, the London trader said.

The day did see the pricing of one new issue: a €300 million offering of 4.875% notes due 2016 from Ljubljana, Slovenia-based telecommunications provider Telekom Slovenije DD.

And it is possible that The Republic of Senegal will bring to market its planned dollar-denominated, benchmark-sized offering of notes via Citigroup on Friday, the London-based market source said. Some sources say the deal could total $200 million.

Also on the radar screen: Col. Lomas de Chapultepec, Mexico-based resort operator Grupo Posadas, which is talking to investors on a roadshow but may not necessarily do a deal.

"I'm not sure the market's really wanting to take that kind of a risk," the New York-based source said. "It's one thing if it's related to food or housing and other essentials. When it's tourism-oriented, it's a bigger stretch."

So at this point it's looking like "things will stay extremely quiet," he said. "We might be done for the year."

Telekom Slovenije prices

Telekom Slovenije priced €300 million 4.875% unsecured notes (expected Baa1//) due Dec. 21, 2016 at 99.225 to yield mid-swaps plus 195 bps, according to an informed market source.

The bookrunners for the deal were BNP Paribas and Credit Suisse.

The Ljubljana, Slovenia-based telecommunications provider has been facing "enhanced competitive and regulatory pressures and an adverse macro-economic backdrop, which are affecting growth prospects and could result in profitability deterioration beyond previous expectations," according to a Moody's report.

Petrobras active and tighter

A trader saw "a lot of activity" in the 5.75% notes due 2020 of Petrobras International Finance, an arm of Brazil's state-run oil company Petroleo Brasileiro SA.

About $45 million of the bonds were seen on the Trace system as having traded during the session, with the trader noting the odd fact that on Tuesday and again on Thursday, there was "lots" of round-lot trading in the credit, while on Wednesday, busy trading had mostly taken place in smaller odd-lot transactions.

The bonds were quoted Thursday around a 200-201 bps over Treasuries context, "so they came in" from the levels seen Wednesday, when they were trading between 205 and 209 bps over.

A market source at another desk meantime said that at one point Thursday the bonds were being quoted as tight as 194 bps, or a dollar-price level of 1021/4.

Nakheel higher but trading flat

A trader said that Dubai development company Nakheel PJSC's paper remained "pretty busy," seeing its 3.172% notes slated to come due on Dec. 14 push up to 54 bid, 57 offered from Wednesday's 45 bid, 47 offered, the bond's biggest gain in nine months.

Meanwhile, its 2¾% notes due 2011 rose to a 39-44 context from Wednesday's levels around 35-38. The company's floating-rate notes due 2010 were at 30-33, also higher than recent levels.

However, it was not good news that was pushing those bonds up from their recent lows; the trader noted that the bonds were now all trading flat, or without their accrued interest, a situation which frequently results in a rise in the nominal price of a bond which has defaulted or which is expected to default.

On the news front, there were no reported new developments in Dubai's efforts to negotiate a six-month debt-payment "standstill" on behalf of the emirate's state-run Dubai World development arm and the latter's subsidiaries such as Nakheel. Unless an agreement is reached, the latter will either have to pay off the $3.52 billion of 3.172% bonds on Monday, or default on them.

Paul Deckelman contributed to this report

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