Emerging markets mixed in trading; Venezuela jumps on devaluation; Mexico, Poland price

By Cristal Cody and Paul A. Harris

St. Louis, Jan. 11 - Emerging markets were mixed during the New York session, according to a New York-based syndicate banker.

Monday's outperformer was Venezuela, the source added.

Venezuela's 7¾% bonds due 2019 jumped 5 points in Monday trading, moving to 74 bid from 69 bid, the banker said.

Venezuelan president Hugo Chavez's decision to devalue the country's currency sparked the rally, sources said.

Over the weekend, Venezuela cut the official value of the bolivar currency in half and moved to implement a dual-rate foreign exchange system where the currency has tiered rates - a lower rate for essential imports and a higher rate for everything else.

"Yesterday, reports suggested that Venezuelans rushed to the stores to buy consumer electronics and other imports before the new rates take effect," a European source said Monday.

"The government is threatening to nationalize firms that raise prices in light of the currency change. Latin America has a long and sorry history with tiered exchange rates. In the end, it leads to higher inflation."

A buy-side source said Monday that the news is "definitely" having an effect in trading.

"We've seen a rally. This is considered to be positive news. It's going to help with fiscal accounts and sustainability of the debt situations in Venezuela."

Venezuela's bonds tightened by 100 to 160 basis points, said the source, speaking at the close of the European session.

Mexico prices $1 billion

Two sovereign deals priced on Monday in the primary market.

United Mexican States priced $1 billion of 5 1/8% global notes (Baa1/BBB/BBB) at 99.037 to yield 5¼% on Monday.

The yield printed on top of price talk.

Bank of America Merrill Lynch and Citigroup were joint bookrunners.

Poland price €3 billion

Meanwhile Poland priced €3 billion of 5¼% 15-year bonds (A2/A-) at a 148 basis points spread to mid-swaps.

The yield came tight to the midswaps plus 150 bps price talk.

HSBC, ING, SG Corporate & Investment Banking and UniCredit managed the sale.

Corporates coming

Mexico's Desarrollos Urbanos, SAB de CV plans to price a $250 million offering of 10-year senior guaranteed notes (Ba3//BB) on Tuesday.

Deutsche Bank Securities and Santander are joint bookrunners for the Rule 144A/Regulation S offer.

Proceeds will be used to repay debt.

Meanwhile China's Evergrande Real Estate Group Ltd. will begin a global roadshow for a dollar-denominated offering of senior notes on Wednesday.

Bank of America Merrill Lynch, Goldman Sachs & Co. (Asia) and BOC International are joint bookrunners for the Rule 144A/Regulation S offering.

Moody's Investors Service is expected to assign its B1 corporate credit rating to Evergrande. The expected Standard & Poor's corporate credit rating is BB while Fitch rated the bonds at BB+.

The Guangzhou-based property company will use the proceeds to repay a structured secured loan, as well as to finance existing and new property projects, and for general corporate purposes.

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