Emerging markets quiet on renewed Greece concerns; Banco Cruzeiro whispered at 9%-9½%

By Christine Van Dusen

Atlanta, May 4 - Emerging markets suffered Tuesday as issuers held off on new deals and investors fled to safer bonds in light of continuing concerns about Greece's contagion effect as well as anxiety about the recent bombing attempt in New York City's Times Square, market sources said.

"It's been a pretty choppy day," a New York-based source said. "I think people are somewhat nervous with obviously everything going on in the European sovereign space."

Market-watchers were focusing on Greece again, this time with concerns that the debt-burdened sovereign may not be able to take the necessary austerity measures to secure the planned bailout. Worries also flared up about Spain and Portugal and whether they would end up in similarly dire straits.

This, along with news that a suspect in the Times Square bombing had been arrested, knocked 30-year bond yields down to nearly record lows and sent investors scurrying to the relative safety of bonds, a market source said.

But emerging market bonds didn't really benefit, the source said.

"Most things have traded off today. Most things are weaker," he said. "Brazil did a recent one-year at 115 [basis points] over Treasuries and it's trading at 175 [bps] now - a good 60 [bps] wider in not much time. That's a pretty good example of how fragile it feels right now."

Argentina swap in focus

Investors were also looking hard at Argentina's debt swap, which offers a second exchange opportunity to bondholders who didn't participate in a 2005 swap.

"The exchange invitation has been launched, and we're working on that," the New York source said.

The sovereign plans to sell $1 billion in seven-year bonds as part of the exchange plan. But that new issue could be in some jeopardy if Greece goes into default, a source said.

"We'll have to wait and see," he said.

Issuers hire bookrunners

Also on Tuesday, Kazakhstan's JSC National Atomic Co. (Kazatomprom) mandated BNP and JPMorgan to hold a roadshow for a eurobond issue beginning this week and traveling through Europe, Kazakhstan and the United States, according to a London-based market source.

And Russia's Credit Europe Bank Ltd. tapped Citibank for a planned eurobond issue that will be marketed beginning Thursday.

The day also saw whispers of 9% to 9½% for the planned issue of five-year notes from Brazil's Banco Cruzeiro do Sul.

"We expect nothing to price this week," the New York-based source said. "There's a little bit of roadshowing and marketing going on, but we expect nothing to price."

Kazatomprom taps BNP, JPMorgan

Kazakhstan's Kazatomprom mandated BNP and JPMorgan for a eurobond issue (expected Baa3/BBB-) for a roadshow beginning May 4 in Europe, Kazakhstan and the United States, according to a market source.

Proceeds from the Rule 144A and Regulation S deal will be used for general corporate purposes.

This is the company's first eurobond issue.

Kazatomprom is a Kazakhstan government-owned nuclear holding company.

Credit Europe Bank mandates

Russia's Credit Europe Bank (Ba3) mandated Citibank for a planned eurobond issue, according to a market source.

A roadshow will begin May 6.

Credit Europe Bank is majority-owned by Credit Europe Bank NV, which is controlled by Turkey's Fiba Group, a financial conglomerate.

Banco Cruzeiro notes whispered

Brazil's Banco Cruzeiro do Sul's planned five-year notes are being whispered at 9% to 9½%, according to a market source.

Bank of America Merrill Lynch, BCP Securities and UBS are the bookrunners for the deal.

Banco Cruzeiro do Sul is a Sao Paulo-based lender.

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