Concerns over Greece's euro exit hit emerging markets; Banque Saudi Fransi sets guidance

By Aleesia Forni

Columbus, Ohio, May 14 - It was "not a pretty day" in the emerging markets space, according to market sources in both Europe and New York, as concerns over Greece's exit from the euro and a potential economic "train wreck" in Europe continue.

However, one source commented that Greece's exit may be "priced in" by the time it actually occurs.

"If it's going to happen, it's not going to happen tomorrow," the source said, adding that the situation is just adding volatility to the market.

In the secondary market, Braskem SA's bonds due 2022 were seen at 99 7/8% bid near the end of New York's session.

The company priced $500 million of 5 3/8% senior bonds at 99.809 to yield 5.4% in late April.

In Russia, the sovereign curve was "very heavy," according to a London-based source. Russia's bonds due 2042 were seen at 103½ bid on Monday, 4 points off last week's high print.

Russia priced $3 billion 5 5/8% 30-year bonds at 99.553 to yield 5.798% in late March.

Also in that region, Gazprombank's recent five-year deal is "enjoying a retail bid," keeping the notes at par bid.

The bank priced a $500 million issue of 5 5/8% five-year notes on Thursday at par.

Additionally, Sistema's notes due 2019 were seen at ¼ point below reoffer during London's session on Monday.

Sistema priced $500 million 6.95% notes at par on Friday.

With regards to the primary, the source said that "is not much of anything out there," with the state of the market dissuading issuers to bring new deals.

"If you hadn't announced a deal, you wouldn't announce it in this kind of market," the source said.

Despite the state of the market, Monday's primary saw Banque Saudi Fransi announce price guidance and IOI Corp. begin a roadshow ahead of a possible deal.

Banque Saudi Fransi sukuk

Banque Saudi Fransi announced price guidance for its planned five-year sukuk at mid-swaps plus 200 basis points, according to market sources.

One source commented that the issuer should see a low coupon with this price guidance.

Citigroup, Deutsche Bank and Credit Agricole are the bookrunners.

IOI roadshow

IOI will host a roadshow this week ahead of a possible fixed-income offering, according to a market source.

The company has mandated Citigroup, HSBC, Mitsubishi and Morgan Stanley to arrange meetings in Asia and Europe from May 14 to May 16.

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