Emerging markets see strength in Latin America, Russia; Kazakhstan's Tristan Oil heads higher

By Paul A. Harris

St. Louis, Feb. 19 - Latin American debt was mixed during the New York trading session, according to an emerging markets syndicate source there.

There was very little liquidity on Friday, the official commented, adding that most of the session's activity was concentrated in the early part of the day.

Mexico's sovereigns were mixed: a bit softer on the short end of the maturity curve but stronger at the 10-year sector.

Peru's 6.55% bonds due 2037 were a point higher on the day.

Colombia was a bit softer on the 10-year part of the curve. Also Colombia's dollar-denominated 7 3/8% global bonds due 2037 were softer, the official said.

"The market is a bit stronger than it was a week ago and seems to be getting back to normal," the official commented.

In the Latin American corporate sector, Colombia's Pacific Rubiales Energy Corp.'s 8¾% notes due November 2016, which priced at 99.09 to yield 8.95% in a $450 million deal last November, continue to be well bid, the official said, spotting them at 106 bid on Friday.

Meanwhile Brazilian corporate paper tightened on Friday, while Mexican corporates were a bit softer.

Russia, Eastern Europe CDS tighten

Russia and Easter Europe tightened by 2 to 5 basis points during the course of the past week, according to a London-based trader.

"Everything is better over the latter part of the week, both bonds and CDS," the source commented shortly after the London close.

Crossover CDS were trading in a range of 519 bps bid, 507 bps offered on Tuesday, the trader recalled.

"It printed today at 473 bps bid."

Russia's five-year CDS were at 200 bps bid on Tuesday and went out Friday at 190 bps bid.

Turkey was bid in the context of 205 bps to 208 bps at the beginning of the week and closed Friday in Europe at 195 bps bid.

Tristan Oil sharply higher

Kazakhstan's Tristan Oil traded sharply higher, the London-based trader said, adding that it traded at 78 bid on Friday, whereas earlier in the week it was in the 40s.

"It's been taken over by another Kazakh entity; however, the identity of the acquiring entity seems to be a little bit ambiguous," the trader said. "The view is that it's another Kazakh credit with recourse to the sovereign."

Asia defensive

Asian credit was defensive on Friday, according to a Singapore-based trader commenting in an e-mail at the close of the session there.

The weakness this trader saw manifested itself more in the CDS and indexes than in cash bonds.

There was some selling in China property names and Asian high-yield sovereigns and some selling in high-grade cash bonds, but there was nothing particularly significant.

Primary remains quiet

Friday produced no primary market news, sources said, although things stand to change during the week ahead.

The Republic of the Philippines' Samurai deal, up to ¥100 billion of Samurai bonds, is believed to be business for the week ahead.

The Philippines will likely issue 10-year paper, according to a market source.

Earlier in the week, guidance of mid-swaps plus 85 bps to 90 bps was heard, according to a market source.

Daiwa Securities Capital Markets, Mitsubishi UFJ Securities and Nomura Securities Co. are leading the offering.

Meanwhile the Russian Federation's Alliance Oil Co. Ltd. (/B+/B) is also in the market with a benchmark-sized bond offering.

Alliance is shopping dollar-denominated Rule 144A and Regulation S global bonds.

With the European roadshow now concluded, marketing is set to shift on Monday to Los Angeles.

The size is expected to be $500 million to $750 million, a market source said.

The tenor of Alliance Oil's new paper is expected to be in the five-year to seven-year range.

The Moscow-based company expects to get the deal done at a rate south of 10%, the source added.

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