Ukraine closes deal on quiet, snowy day for emerging markets; Dubai, DEWA well supported

By Christine Van Dusen

Atlanta, Dec. 21 - Ukraine settled a quickly placed issue of eurobond notes on a Tuesday marked by a rise in Treasury yields, debilitating snow in London and the threat of a ratings downgrade for Portugal.

"It's quiet but firm," a London-based market source said during the European afternoon. "With U.S. Treasuries back to 3.32%, we're seeing prices off the lows of last week."

Dubai Water and Electricity Authority's 8½% notes due 2015, which were seen trading at 106.00 bid, 106.40 offered on Friday, were at 106.05 bid, 106.45 offered on Tuesday.

"Dubai and DEWA remain well supported," the trader said.

Abu Dhabi-based Mubadala's 5¾% notes due 2014 were at 108.25 bid, 109.00 offered on Tuesday after trading at 108.25 bid, 108.75 offered on Friday. The issuer's 7 5/8% notes due 2019 - which were trading at 117 bid, 117.50 offered a week ago - were at 117.31 bid, 118.06 offered on Tuesday.

"The market is stuck in a snowdrift," another London-based market source said. "A lot of clients and traders are stuck, and there's virtually nothing going on. I sense that real money guys are long of cash, and still there is a lot of concern about European sovereign risk and the impact of a possible rescue for Ireland and Greece on other markets."

Ukraine sells notes

Ukraine settled a $500 million issue of notes due Dec. 21, 2011 at par to yield 6.7%, an informed market source said.

Credit Suisse was the bookrunner for the drive-by transaction, which came to market on Monday.

Otherwise, the primary market was at a standstill on Tuesday.

"It's very quiet," a Toronto-based market source said. "Not much has happened today. We're on holiday mode now."

Just a few deals were showing up on radar screens as to-be-determined issues. On that list were possible notes from Russia and Moscow-based VTB Bank, as well a potential issue of bonds from Chile-based forestry products company Inversiones CMPC SA via Citigroup, Itau and JPMorgan.

Looking ahead, the London-based market source said he's watching the European banking sector carefully for additional weakness.

"And my feeling is that investors will [add] corporate exposure in 2011," he said. "EM is still the fashion. So I am recommending Russian corporates as the pick of the season."

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