Greece fears hamstring emerging markets primary; deals delayed; Finspace extends roadshow

By Christine Van Dusen

Atlanta, May 7 - Emerging markets investors and issuers spent Friday focused on Greece, waiting to see what will happen with the troubled sovereign's €110 billion bailout and whether the European Central Bank will step in to help contain the contagion, market sources said.

The trading scene was "carnage" at midday in Europe, a London-based market source said. "It's ultra-busy here."

Yields on 10-year Treasuries rose on Friday and hit a session high of about 3.5% on word that the United States had added 290,000 jobs in April. But that good news was tempered by another U.S. Bureau of Labor Statistics report released Friday, which showed that the unemployment rate nudged up slightly to 9.9%.

Really, though, the Greece story continued to eclipse all others. Market-watchers speculated that the European Central Bank might establish a credit facility for more than 1,000 European banks. Still, nervousness about Greece's contagion effect persisted.

"For the world over the story is Europe and exactly how that's going to play out," a New York-based market strategist said. "I think all eyes, at least for the weekend, will be on whether the rumors of the establishment of a liquidity facility or bailout will materialize. That's going to be what people talk about, when it will be announced. Everything else is a sideshow right now."

Risk aversion abounds

In the secondary, "I think everything is the same trade right now," the New York source said. "There is a general de-risking. With respect to emerging markets, they've had a terrific run."

The iShares MSCI Emerging Markets Index Fund was "off about 14%, which is a pretty healthy sell-off," he said.

At the same time, though, "there certainly is a case to be made that it's getting a little bit overdone here, especially if over the next couple of days the E.U. comes forward with an additional support package or a plan to buy sovereign bonds in the secondary," he said.

"All of this nervousness will go right away and there could be a rip and run next week. It depends on exactly what unfolds."

Primary hushed again

The primary was again quiet on fears related to Greece.

"There is no way anyone can come to market if things stay the way they are," the London-based source said.

New issuance was "completely shut down," the New York source said.

China's Renhe Commercial Holdings Co. Ltd. postponed its planned benchmark-sized five-year notes. And Albania postponed its planned dollar-denominated eurobond issue due to market conditions.

"That was the story everywhere. IPOs were pulled, deals were pulled, buybacks were ceased. Everyone stopped doing everything," the New York source said. "It was a total shutdown.

"Short-term credit markets spiked considerably with the overwhelming sense of nervousness that gripped everyone in the market for the last four days. Where we go from here, I don't know."

One issuer did bring a deal to market on Friday.

Philippines finance institution Asian Development Bank priced a R$50 million add-on of 9¼ notes due 2013 at 99.3225, according to a company filing.

The notes will be consolidated to form a single series with the R$225 million 9¼% notes due April 30, 2013 that were issued on April 30. Toronto Dominion Bank was the bookrunner for the deal.

Renhe Commercial delays deal

China's Renhe Commercial Holdings (Ba2/BB) is postponing its planned benchmark-sized five-year senior notes, according to a market source.

The source did not provide a reason for the delay.

Bank of America Merrill Lynch, BOC International, JPMorgan and UBS are the bookrunners for the Rule 144A and Regulation S deal, which was marketed during a roadshow that started April 30.

Proceeds would be used to finance existing projects, to acquire and develop new projects and for working capital.

Renhe Commercial is a Harbin, China-based developer and operator of underground shopping centers.

Albania postpones eurobond

Albania is delaying the planned dollar-denominated eurobond issue that was expected to come to market this week via JPMorgan and Deutsche Bank, a market source said.

The source said current market conditions were to blame.

The deal was expected to total between $300 million and $400 million.

Finspace extends roadshow

Bangkok-based Finspace has extended the roadshow for its planned issue of $460 million five-year senior unsecured notes (B1/B+/B+) into the May 10 week, an informed market source said.

The roadshow began April 29 and will continue Monday in London.

"It will be marketed throughout next week and then pricing," the source said.

Proceeds from the notes, which are non-callable for three years, will be used for plate mill expansion, debt refinancing, acquisitions and general corporate purposes.

Finspace is a manufacturer and fabricator of pipes and related components for use in the petrochemical sector.

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