Emerging market debt tightens on strong jobs data; new issuers tap market

By Reshmi Basu, Paul Deckelman, and Paul A. Harris

New York, Dec. 8 - Emerging market debt saw support Friday on the back of stronger than expected employment data in the United States.

On the primary front, several issuers took advantage of the market's overall positive sentiment and investors' appetite for debt.

From Ukraine, JSC Innovation Bank (Ukrsibbank) placed a $500 million offering of five-year fixed-rate notes (Ba2//BB-) at par to yield 7¾%.

The deal came inside of price talk, which was set at the 8% area.

BNP Paribas, HSBC, and UBS were lead managers for the Regulation S deal of senior unsecured loan participation notes.

Moving to Hong Kong, Liu Chong Hing Bank Ltd. sold an inaugural offering of $125 million in 10-year subordinated notes at par to yield three-month Libor plus 93 basis points.

The notes will be callable on Dec. 16, 2011. If the notes are not called, the coupon steps up by 100 basis points.

Goldman Sachs and HSBC managed the Regulation S deal.

Elsewhere, Indonesian coal producer PT Berau Coal launched a $325 million two-part offering of senior notes (B1//B+) on Friday.

The issuer talked a $225 million tranche of five-year fixed-rate notes at 9 3/8% and a $100 million portion of five-year amortizing floating-rate notes at three-month Libor plus 375 basis points.

Merrill Lynch is the bookrunner for the Rule 144A/Regulation S issue.

Meanwhile, State Bank of India sold a $300 million offering of five-year eurobonds at par to yield three-month Libor plus 50 basis points.

The deal came in line with revised price guidance of 50 basis points area, which was lowered from prior guidance of Libor plus 50 to 55 basis points.

Barclays Capital, Citigroup and Deutsche Bank were lead managers for the Regulation S deal.

A trader who focuses on Asian credits said the new issue closed in Asian trading at Libor plus 50 basis points bid, Libor plus 42 basis points offered. But he added that he did not see the issue trading in New York.

"It was very quiet today [Friday]."

America Movil prices, gains

Finally, Latin America's largest wireless company America Movil, SA de CV placed a $734 million equivalent offering of 30-year peso-denominated bonds at par to yield 8.46%.

A trader who focuses on Latin America names said that the new America Movil deal "did well - it was 12 basis points tighter on the day versus the issuance yield" in European trading, but he did not see any trading activity in New York, suggesting it would be "Monday business."

In general, he said corporates were "pretty quiet."

"Margins were tighter across the board."

EM tightens on jobs data

Emerging market debt inched higher on the back of better than expected jobs data in the United States. The strong numbers suggested that the health of the U.S. economy is just fine.

The Labor Department reported that the U.S. economy added 132,000 jobs last month, exceeding the market consensus for a report of 110,000 new jobs.

As a result, U.S. equities posted gains, which bolstered investors' appetite for riskier credits.

However, with the market performing so well over the last couple of weeks, there was limited upside from the news, noted a market source.

Spreads came in by about five basis points while returns were a tad down, noted the source.

In trading, the bellwether Brazilian bond due 2040 gave up 0.20 to 132.95 bid, 133.05 offered. The Argentine discount bond due 2033 gained 1.05 to 104 bid, 104.25 offered.

Meanwhile Mexico's debt declined as U.S. Treasury yields jumped on the jobs report.

During the session, the Mexico bond due 2026 eased 0.25 to 162.75 bid, 163.75 offered.

Moving to Asia, the first trader observed that "there were some client flows, but nothing showed up in secondary."

Apart from the new State Bank of India deal, he said it was "an incredibly quiet day."

"Spreads tightened pretty much across the board in Asia, but most of that has been on a sloppy market and Treasuries selling off a point and our market holding in there pretty well, but flows were very much on the light side.

"It was a typical Friday," he noted.

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