Positive tone for emerging markets assets ahead of holiday, year-end; Ukraine, Russia see buyers

By Christine Van Dusen

Atlanta, Dec. 22 - Emerging markets assets had a positive trading session on Thursday - albeit it a slow one with little price movement - as investors and issuers continued to close up shop for the holidays and in advance of the new year.

"You could say it's very quiet," a London-based trader said. "Or you could say it's simply that the market has found an equilibrium."

Overall, Thursday's tone was upbeat, he said, and prices weren't moving much.

"There are plenty of questions right now: Is the fact that the European banks took €489 billion good or bad? Good they leapt at the offer of free money, or bad that they needed so much funding?" he said. "And will Kazakhstan's BTA Bank pay their coupon? The latest news is a shareholders' meeting to discuss a second restructuring on Jan. 26."

This could be good news for the coupon payments on Jan. 1, he said, but it's not certain.

"And will Turkey be the first sovereign to issue in the EM space in 2012?" the trader said. "The 2041s came on Jan. 5 last year and proved to be a great trade for them. Their curve is holding firm as the currency is supported at $1.89."

Buyers for Ukraine, Russia

In trading on Thursday, some retail investors were seen buying Ukraine, Russia and Turkish bank bonds, the London trader said.

"The Middle East and North Africa are taking a pause after the strong rally yesterday," he said.

He also noted that Hungary had been downgraded to BB+ by Standard & Poor's, which sent the sovereign's five-year credit default swaps spread 30 basis points wider.

Prices mostly flat

Taking a closer look at trading on Thursday, Russia's 5% 2020 notes were seen at 102.75 bid, 103.50 offered after Wednesday's quote of 102.50 bid, 103 offered. Gazprom's 5.999% 2021s were quoted at 99 bid, 99.75 offered, the same as on the previous day. And Vimpelcom's 7.504% 2022s were trading at 83.50 bid, 84.50 offered after Thursday's level of 83.62 bid, 84.62 offered.

Also from Russia, Lukoil's 6.656% notes due 2022 were again seen at 100.25 bid, 101.25 offered.

Turkey's 5 1/8% 2022s were trading Thursday at 95.75 bid, 96.50 offered after being seen Wednesday at 102.50 bid, 103 offered. And South Africa's 5 7/8% 2022s were seen at 115.25 bid, 116 offered after Wednesday's 115 bid, 115.75 offered.

Middle East in focus

From the Middle East, Qatar's 4½% 2022s were again quoted at 103 bid, 103.75 offered after pricing on Nov. 29 at 98.951.

The 5 7/8% 2021s from Abu Dhabi National Energy Co. (TAQA) - which priced on Dec. 5 at 99.515 - traded Thursday at 103.25 bid, 104 offered after being seen Wednesday at 103.25 bid, 103.75 offered.

IPIC's 5½% 2022s were seen at 99.50 bid, 100.50 offered on Thursday. On Wednesday, the notes were trading at 99.25 bid, par offered. The bonds priced on Oct. 28 at 99.743.

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