Bit stronger EM trading; spreads inch tighter; primary stays shuttered; Altice on roadshow

By Christine Van Dusen

Atlanta, June 12 - Emerging markets assets managed to put in a somewhat better trading session on Wednesday as a result of stronger unemployment data from the United States and the United Kingdom.

"Incoming data in the US continue to paint a picture of subdued first-half 2013 real gross domestic product growth [for the US]," according to a report from Barclays. "That said, expectations about the outlook for the US have improved."

Said a New York-based trader, "EM is a little better."

After many days of widening, the Markit iTraxx SovX CEEME ex-EU index spread on Wednesday narrowed 1 basis point to Treasuries plus 228 bps. The Markit iTraxx Crossover index spread - quoted at 474 bps over Treasuries on Tuesday - moved in Wednesday to a 458 bps spread.

"In Istanbul, police have cleared Taksim square after clashes with protestors," a London-based analyst said. "Nonetheless, a better tone this morning with Turkish credit default swaps 5 bps tighter to 180 and sovereign cash 3 bps to 9 bps tighter."

Turkish corporate bonds were up about a ½ point.

"The rest of the market also feels supported this morning," she said. "Russian corporates are trading a ½ point to ¾ point better and the Russian sovereign is up a ½ point."

Meanwhile, the primary market remained quiet.

"The new issue market has been dead," the New York trader said.

In this environment, VTB Bank's perpetual notes are a good bet, according to a report from UFS Investment Co.

"The issue offers the yield comparable to the second tier, while the issuer has an investment grade," the report said. "The bond has a speculative upside."

Lat-Am corporates tick up

Latin American corporate bonds opened a bit better on Wednesday, the New York trader said.

"But the market seems to be playing it very cautious," he said. "One hand on the lift lever, the other changing the dressing on the gaping wound."

Brazil's Votorantim Cimentos SA saw its 2041s get a boost to par, while Brazil-based Odebrecht Oleo e Gas SA's 2042s were lifted to 1031/4.

"The big question would be, where's the next offer on those?" he said. "It's surely not 1033/4."

Brazil's Petroleo Brasileiro SA (Petrobras) and Vale SA started the day about 10 bps tighter on Wednesday, while Marfrig Alimentos SA was trading above par.

Banco BBVA sees gains

Corporate assets from Latin America weakened into the close on Wednesday, the New York trader said, with sellers outnumbering buyers.

"We are left unchanged to a little higher on dollar price," he said. "Even with late weakness, some credits were able to close with gains."

Banco BBVA was one of them, he said, though that name has been widening since May.

"Chilean corporates didn't move the needle," he said. "Same with Colombian. A few Peru credits managed a small uptick."

Venezuela, PDVSA underperform

On the sovereign side, higher-rated credits were tighter on the day, another New York-based trader said.

Underperformers included Venezuela and Petroleos de Venezuela SA (PDVSA), closing down as much as 2 points.

"Argentina bonds remain range-bound," he said. "We continue to see better selling from accounts in most credits. Volumes moderate with choppy price action."

Ukraine in focus

From Ukraine, trading has been "technical, with little regard for fundamentals," said Svitlana Rusakova of Dragon Capital.

"Corporates were the relative outperformers," she said.

Following weaker performance earlier in the week, the recent issue from State Administration of Railways Transport of Ukraine (Ukrzaliznytsia) - 9½% notes due 2018 that priced at par - has been sighted at 96 offered.

State Export-Import Bank of Ukraine's (Ukreximbank) recent increase of its 8¾% notes due 2018 that priced at 101.437 and fell in recent trading moved to 94½ on Wednesday.

And JSC State Savings Bank of Ukraine's (Oschadbank) 8 7/8% notes due 2018 that priced at par but traded lower at the height of the market's volatility moved to 93½ on Wednesday.

Efes weakens

From Turkey, Istanbul-based beverage company Anadolu Efes Biracilik Ve Malt San was under the microscope on Wednesday following the country's proposed controls on alcohol consumption and advertising.

"We view these as negative for Efes," the analyst said. "This follows relatively weak first-quarter results for the beer division, affected by difficult market conditions."

Bonds have been weak for the past several weeks in anticipation of the alcohol-business limits, she said.

"And although the spread has widened to 280 bps, we will remain cautious on the credit in the short term," she said.

Altice starts roadshow

Altice Group, a telecom which operates in Israel, began marketing a €250 million offering of 10-year senior notes on Wednesday, according to a market source.

Goldman Sachs and Morgan Stanley are the active bookrunners for the Rule 144A and Regulation S offer. Credit Agricole CIB, Credit Suisse and Deutsche Bank are the passive bookrunners.

Proceeds will be used to refinance debt and fund acquisitions.

Altice operates Hot Mobile, a wireless telecommunications company in Israel, and Israeli cable television company Hot.

Paul A. Harris contributed to this article.

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