Pipeline keeps growing; Fed's rate decision seen spelling good news for emerging markets

By Reshmi Basu and Paul A. Harris

New York, March 16 - The pipeline of upcoming deals continued to build Tuesday with planned offerings from the Czech Republic, Indonesia, Romania, Russia, Slovakia and South Korea.

Expected sovereign issues coming down the pike include the Republic of Slovakia. The sovereign plans to issue a €1 billion five- to 10-year bond deal (A3/BBB) in the second quarter.

Also, the Republic of Romania is expected to unveil a €600 million 10-year bond deal (Ba3/BB) during the first half of the year.

Russian issuers added to the pipeline with a proposed $200 million three- to five-year bond deal (B+) from telecommunication company Vimpel Communications.

Moscow-based Vneshtorgbank plans to issue a $300 million-plus five- to 10-year bond issue (Baa3).

Dresdner Kleinwort Wasserstein and Citigroup are the bookrunners on the Rule 114A/Regulation S deal.

Another bank but from a different country is also working on a debt offering. Indonesia's Bank Banamon plans to issue 10-year subordinated bonds (B3/B), a deal expected to price the week of March 22.

A roadshow is expected to start on March 18 in Singapore, then move to Hong Kong and London.

Citigroup and Deutsche Bank Securities are the bookrunners.

Other corporate deals unveiled came from the Czech Republic and South Korea.

Sazka, the Czech Republic lottery company, is expected to price a €190 million sale of 10-year international bonds in late March or early April.

Credit Suisse First Boston is the bookrunner.

And from South Korea, auto maker Hyundai Motor Co. is pre-marketing an offering of $150-$200 million of offshore floating-rate bonds (Ba1/BB).

Unchanged interest rates welcomed

Following Tuesday's meeting, the Federal Open Market Committee surprised no one by keeping the fed funds target rate unchanged at a 45-year low of 1%.

An analyst said the Fed's decision was a boost to emerging markets.

"The Fed decision is a big plus for EM - they've essentially guaranteed that it will keep rates low for the next several months, which will keep plenty of liquidity in the market chasing high-yielding assets like EM," said the analyst.

"It's also critical to have the Fed committed to providing continued ample liquidity at a time when the EM issuance pipeline is so full," he added.

The analyst also added that the Fed news helped the market absorbed the blow of the Madrid terrorist attacks.

"Another major attack could bring back the risk aversion story, but for now the market is betting that it won't have any lasting effect," he said.

Hutchison Whampoa woes continue

Meanwhile Hutchison Whampoa continued its recent pattern of volatile trading, according to a market source.

The Hong Kong telecommunications company saw market levels on its bonds widen as much as 10 basis points overnight before Hong Kong trading started. They rallied back during trading but then drifted wider into the close.

The volatility in the company's bonds is indicative of uncertainty regarding Asian markets, the source said.

But another source said Hutchison Whampoa has been hit by nervousness about its upcoming earnings report.

Hutchison Whampoa's 6¼% bond due 2014, one of the most liquid issues in Asia, was quoted at 212 basis points bid, 204 basis points offered at the Hong Kong close.

Its 5.45% bond due 2010 ended at 218 basis points bid, 212 basis points offered while the 7.45% bond due 2033 finished at 253 basis points bid, 244 basis points offered.

The market remains very nervous heading into Thursday, according to the source.

AES Gener loan postponed

In other news, AES Gener SA has postponed its proposed $75 million syndicate loan, according to a market source.

On March 12, AES Gener came to market with an upsized $400 million of 10-year unsecured notes to yield 7.521%.

The offer was increased from an original size of $300 million.

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