Emerging markets quietly await word on Greece, Argentina; Hana Bank, Banco Safra price

By Christine Van Dusen

Atlanta, April 26 - Emerging markets were slow Monday as investors and issuers waited to see what would happen with Argentina's debt-swap plan and Greece's debt bailout, market sources said.

"It's pretty quiet," a New York-based market source said. "There's not much going on, frankly."

Most of the credits he watched were "basically unchanged," he said. "There's not a lot of change in prices. It's a fairly uneventful Monday."

Sovereigns, he said, were the main standout. They were "trading heavily on the back of the new Russia deal last week," he said, referring to the country's pricing of $2 billion 3 5/8% notes due 2015 at 99.475 to yield Treasuries plus 125 bps and $3.5 billion 5% notes due 2020 at 99.363 to yield Treasuries plus 135 bps.

"Mexico seems to be trading heavy," he said. "Everything else is kind of status quo. I don't know what's going on. Decent technicals are fighting tight valuations."

Volumes are "fairly robust," a Connecticut-based market source said. "Managers still report net inflows."

Awaiting debt swap

What most investors are waiting for now, he said, is the outcome of Argentina's debt exchange.

The sovereign is offering a second exchange opportunity to the holders of $20 billion in bonds who didn't participate in a 2005 swap. That deal offered investors $33.7 per $100 worth of investment. The new swap is expected to be worth less but have greater market value, sources said, and should pave the way for Argentina to issue new bonds.

"Today in particular, Argentina is very well bid," the Connecticut source said. "Clearly the market is expecting the exchange to hit its intended 60% participation rate."

Primary slow on Greece

The primary side saw few deals Monday as investors digested the supply of the last few weeks and continued coping with uncertainty about how and when debt-heavy Greece will get international aid.

"There's been quite a bit of issuance over the past few weeks in emerging markets," a source said. "So I would say, given that amount of issuance and the news in Greece, the market is still holding up reasonably well."

He noted Monday's pricing of South Korea-based Hana Bank's $500 million 4½% notes due 2015 at 99.836 to yield 4.534%, or Treasuries plus 197 bps.

"It seems reasonable and priced modestly cheap," the Connecticut source said.

Said the New York source: "That's done OK. It's about 3 to 4 [bps] tighter."

Also pricing Monday was Banco Safra's $200 million 3½% notes due October 2013 at par.

Banco Safra is a Sao Paulo-based lender.

Pace could pick up

The New York source expects activity may pick up slightly after Wednesday, when the Federal Open Market Committee meets to determine whether interest rates will remain near zero.

"That should be a catalyst for something," he said.

A deal that could come soon is the Dominican Republic's planned benchmark-sized issue of dollar-denominated sovereign global bonds via Barclays Capital and Citigroup. The deal, which was first announced in 2009, "should have no problem getting done," the Connecticut source said.

Coming soon, he said, is a planned two-tranche issue of five- and 10-year notes from Kazakhstan's KazMunaiGas. "That should be decent," he said. "It's a big one."

Also on Monday, Brazil's Marfrig Overseas is holding a roadshow for a planned issue of 10-year bonds that could price during the May 3 week, an informed market source said. And Kazakhstan's KazMunaiGas planned a two-tranche issue of five- and 10-year notes. That deal could come to market as soon as this week.

Monday also saw the Slovak Republic sell €205.5 million 3½% government bonds due Feb. 24, 2016 at an auction in a reopening of an issue launched in February, according to government filings. The demand totaled €428.5 million, with €10 million from non-residents, and the average yield was 3.34%.

Hana Bank prices notes

South Korea's Hana Bank priced $500 million 4½% notes due Oct. 30, 2015 at 99.836 to yield 4.534%, or Treasuries plus 197 bps, according to a market source.

Bank of America Merrill Lynch, Citi, JPMorgan and RBS were the bookrunners for the Rule 144A and Regulation S deal.

The non-callable notes priced below talk of Treasuries plus 205 bps to 215 bps.

Hana Bank is based in Seoul.

Marfrig sets roadshows

Brazil's Marfrig Overseas is holding a roadshow for a planned issue of 10-year bonds (/B+/) that could price during the May 3 week, an informed market source said.

Credit Suisse is a bookrunner for the deal, which is expected to total about $500 million.

The issue will be non-callable for five years.

Marfrig Alimentos SA is guaranteeing the bonds.

Proceeds will be used for working capital and to refinance debt maturities in 2010 and 2011, according to ratings agency Fitch Ratings.

Marfrig is a Sao Paulo-based beef producer.

KazMunaiGas plans notes

Kazakhstan's KazMunaiGas is planning a two-tranche issue of five- and 10-year notes, according to a market source.

The offering could come to market as soon as this week.

Other details of the offering were not immediately available Monday.

KazMunaiGaz is an Astana, Kazakhstan-based government-run energy firm.

Slovakia auctions bonds

The Slovak Republic sold €205.5 million 3½% government bonds due Feb. 24, 2016 at an auction Monday in a reopening of an issue launched in February, according to government filings.

The demand totaled €428.5 million, with €10 million from non-residents.

The minimum yield was 3¼%. The average yield was 3.34%, and the maximum yield was 3.4%.

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