Emerging markets investor sentiment 'intact'; Sistema prices notes; Tinkoff sets roadshow

By Aleesia Forni

Columbus, Ohio, May 11 - Investor sentiment toward emerging markets debt "remains intact," which may reflect the flight away from European bonds to investments "anywhere else," according to one market source.

Reflecting this belief, emerging market bond funds reached an eight-week high with inflows of $1.05 billion for the week ended May 9, according to fund-tracker EPFR Global.

The latest inflow number follows the previous week's $540 million inflow, bringing the year-to-date total to $19.57 billion.

One market source commented that crossover funds, which are typically high-yield funds that can invest in emerging markets debt, also increased this week.

Though the source could not point to anything specific within the emerging markets space, this record amount of money coming into the asset class could be due in part to investors' search for new debt markets.

However, the source noted that it is "very possible" that next week could see some outflows if the negative pressure on bond prices persists.

Additionally, the Markit iTraxx SovX CEEMEA Index of Central and Eastern European, Middle East and African credit-default swaps was at 295 basis points during London's Friday session, 10 bps wider on the week.

In the primary market, Sistema sold a $500 million issue, while Tinkoff Credit Systems is holding investor meetings ahead of a possible deal.

Sistema prices

Friday's primary saw Sistema price $500 million 6.95% notes due 2019 at par, according to a market source.

The notes priced at the tight end of talk, which was set in the 6.95% to 7% area.

One source noted the size of the deal as a "good sign" for the company, given that the Russian conglomerate is BB- rated by Fitch Ratings.

Tinkoff roadshow

Also in the primary, Tinkoff has mandated Citigroup, JPMorgan and VTB Capital to arrange a roadshow in Europe and Asia that will run through May 16, according to a market source.

A possible dollar-denominated Regulation S offering may follow.

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