Greece solution primes emerging markets for new supply; Russian Railways, Votorantim price

By Christine Van Dusen

Atlanta, March 26 - Emerging markets activity ended the week as quietly as it began, with little new issuance but good investor demand. There were some decent movers in the secondary as concerns about debt-laden Greece began to fade, market sources said.

"It's feeling good to me," a New York-based source said.

After days of argument and disagreement, European leaders on Friday agreed to a bailout plan for Greece that will combine loans from European countries with funds from the International Monetary Fund.

This alleviated concerns that Greece's troubles would spread to other economies and clears the way for new issuance from emerging market sovereigns, sources said.

"Post-Easter, we'll see more Latin American-type issuance in early April, then more Asia and Eastern Europe at the back end of April," the New York source said.

For now, though, "it's going to be pretty quiet," he said.

Or, as a London-based market source put it Friday, "it's a bit dull today."

Primary eyed

The trader was keeping his eye on two issues Friday afternoon: a new deal from Russian Railways (RZD Capital), which priced $1.5 billion 5.739% notes due 2017 at par to yield Treasuries plus 241 basis points, and trading on the $1.25 billion 5½% notes due 2020 from the Kingdom of Bahrain, which priced Wednesday at 97.829 to yield 5.789%, or mid-swaps plus 200 bps.

Russian Railways started trading Friday at 100.75 bid, 100.875 offered, up from the pricing level of par, the source said. "Bahrain is 99 bid, 99.20 offered, which is about 25 tighter versus the launch on the spread," he said. "It's a very impressive effort."

Demand "remains quite high, in terms of appetite overall," the New York source said.

Another new deal piqued some interest on Friday.

Brazil's Voto-Votorantim priced $750 million 6¾% bonds due 2021 at 99.046 to yield 6 7/8%, or Treasuries plus 302.6 bps, according to a market source.

"We didn't have room for that one," a West Coast-based market source said.

He was, though, taking a good look at a planned issue from Mexico's Grupo Papelero Scribe SA de CV. That deal - for $250 million 10-year notes via Credit Suisse - should be coming on Monday, he said.

Meanwhile Korea traded weaker on Friday after a South Korean ship sank, which led the country's navy to fire on a ship in the Yellow Sea near the North Korean border.

"That caused some volatility today," the West Coast source said.

Trading on most Asian issues and new pricing were "pretty much out" on Friday afternoon, according to a New York-based trader. "It's a very, very quiet Friday with the missile being fired, and going into the weekend. Besides that, there wasn't a whole lot going on."

Russian Railways prices

Russian Railways priced $1.5 billion 5.739% notes due April 3, 2017 (Baa1/BBB/BBB) at par to yield Treasuries plus 241 bps, according to an informed source.

Barclays, JPMorgan and VTB Capital were the bookrunners for the deal, which was whispered at a 5.9% yield.

Russian Railways is a state-owned railway company based in Moscow.

Voto-Votorantim prices

Brazil's Voto-Votorantim priced $750 million 6¾% bonds due April 5, 2021 (Baa3/BBB/BBB-) at 99.046 to yield 6 7/8%, or Treasuries plus 302.6 bps, according to a market source.

The bookrunners for the deal were Bank of America Merrill Lynch, Citigroup and HSBC.

Voto-Votorantim is part of industrial conglomerate Votorantim Group, a mining, metals and paper manufacturer based in Sao Paulo.

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