Wider spreads for EM assets; Dubai bonds tighten; Lat-Am pauses; new deals oversubscribed

By Christine Van Dusen

Atlanta, Sept. 13 - Spreads ended a volatile week a bit wider for emerging markets assets as Treasuries stabilized and dealers paused to take a breath on Friday.

The Markit iTraxx SovX CEEME ex-EU index spread on Friday opened at 229 basis points over Treasuries, 4 bps wider than Thursday. The Markit iTraxx Crossover index spread - seen Thursday at 386 bps - moved out to 395 bps on Friday.

"After two weeks of private bank buying of Turkish banks and corporates, we are starting to see profit-taking," a London-based analyst said. "Turkish sovereign paper is widening in the mid-curve with rumors of a potential new issue next week."

In other trading, Dubai's 2043s were spotted at 84 on Friday, about 32 bps tighter on the week, a trader said.

Bonds from Ukraine headed into the end of the week on a more negative note, said Svitlana Rusakova of Dragon Capital.

"Ukraine clearly underperformed, dropping nearly a point on the long end," she said. "Quasi-sovereigns continued to get better, albeit slowly."

And from Latin America, corporates went into "stand-by mode" on Friday, a New York-based trader said.

"Dealers ... are feeling better bidding on some credits and hesitant to offer others as the fear of a gap leg higher is a possibility, though not probable," he said.

The new deal from Ecopetrol traded with less volume than was seen in previous days and spreads remained close to Thursday's close.

"Very quiet day in the Street, and customers hawking for offers was a bit more relaxed," he said. "It felt like everyone needed a little break after volumes were building up through the week at breakneck paces."

Latvia ponders issuance

Latvia could price an issue of $1 billion of notes in the fourth quarter, a market source said.

No other details were immediately available on Friday.

The sovereign held a roadshow in June for a possible issue of notes via Citigroup, JPMorgan and Societe Generale.

Kexim draws orders

Export-Import Bank of Korea's (Kexim) new two-tranche issue of $1 billion notes due 2016 and 2018 brought in about $2.1 billion in orders from 109 accounts.

The $500 million floating-rate notes due 2017 priced at par to yield Libor plus 85 bps. The notes were talked at a spread of Libor plus 85 bps to 90 bps.

The tranche drew about $2.7 billion in orders from 155 accounts, with 50% from the United States, 31% from Asia and 19% from Europe.

Fund managers and insurers picked up 43%, central banks and official institutions 40%, banks and private banks 16% and others 1%.

Funds, insurers like Kexim

Kexim's $500 million 2 7/8% notes due 2018 priced at 99.617 to yield Treasuries plus 127.5 bps. The notes were talked at a spread in the Treasuries plus 130 bps area.

About 48% of the orders came from Asia, 42% from the United States and 10% from Europe.

Fund managers and insurers took up 49%, banks and private banks 25%, central banks and official institutions 20% and corporates and others 6%.

BofA Merrill Lynch, HSBC, Citigroup, Deutsche Bank, Goldman Sachs and Mizuho Securities were the joint bookrunners and lead managers for the Securities and Exchange Commission-registered deal. Samsung Securities is a lead manager.

The proceeds will be used for general operations, including extending foreign currency loans and repayment of maturing debt and other obligations, according to a filing with the SEC.

Century Master oversubscribed

The final book for China-based Century Master Investment Co. Ltd.'s new $600 million 4¾% notes due 2018 was $3.7 billion from 173 accounts, a market source said.

The notes priced at 99.425 to yield Treasuries plus 320 bps with BOC International, Credit Suisse, Standard Chartered Bank, ABC International and UBS in a Regulation S-only deal.

About 91% of the orders went to Asia and the rest to Europe, with 45% to fund managers, 28% to private banks, 14% to banks, 10% to insurers and 3% to others.

The notes are guaranteed by China Orient Asset Management (International) Holding Ltd., a subsidiary of Hong Kong-based China Orient Asset Management Corp.

The proceeds will be used for working capital and for general corporate purposes.

NSB final book

Sri Lanka-based National Savings Bank's new issue of $750 million 8 7/8% notes due 2018 drew a final book of $2.3 billion from 175 accounts, a market source said.

The notes priced at par to yield 8 7/8% via Barclays, Citigroup and HSBC in a Rule 144A and Regulation S deal.

About 39% of the orders came from the United States, 38% from Europe and 23% from Asia.

Fund and asset managers picked up 88%, banks and private banks 10% and insurers and others 2%.

VTB in focus

One trader was interested in Russia-based VTB Bank on Friday after the lender reported second-quarter earnings that missed estimates.

"The miss was driven by higher provisions and a revaluation of a single investment," she said.

In a conference call VTB Bank "stressed that they are unlikely to issue in the coming months, although they remain open to opportunities, including subordinated issues, but emphasized that the amount would be much smaller than 2012 due to a strong liquidity position in foreign currencies," she said.

The lender held a roadshow in January for a possible issue but never brought the notes to the market.

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