Emerging market debt takes break; Asia trading in ranges

By Reshmi Basu and Paul A. Harris

New York, Nov. 11 - A day after the Federal Reserve's decision to raise interest rates for the fourth time this year, emerging market debt took a break on Veteran's Day in the United States.

In the primary market, two corporates joined the pipeline. Russia's Vneshtorgbank (VTB) plans to bring an offering of $500 million minimum of eurobonds at the beginning of 2005.

The source added that VTB has signed an agreement with ABN Amro Bank, Citigroup, ING Bank, JPMorgan and other banks to obtain a $300 million syndicated loan. Those four banks are expected to play prominent roles in the bond deal.

Ukraine's largest telecommunications company, Ukrtelecom is expected to issue $350 million of eurobonds during the first half of 2005.

Meanwhile Asian markets traded in ranges with the Philippines lower by around a quarter of a point, according to a market source.

In a surprise move, Korea's Central Bank lowered its benchmark interest rate by a quarter of a point to 3¼% in a bid to dampen the strong won and revive the ailing economy.

At Thursday's Asian close, the spread on the Korea bond due 2008 was unchanged at Treasuries plus 12 basis points while the bond due 2012 narrowed one basis point from Wednesday's close to Treasuries plus 73 basis points.

The spread for the Export Import Bank of China's bond due 2014 was one basis point tighter at Treasuries plus 65 basis points.

Hong Kong's Hutchison Whampoa bond due 2014 widened two basis points to Treasuries plus 148 basis points from Wednesday's close.

India's ICICI Bank saw its bond due 2009 unchanged at Treasuries plus 155 basis points.

The Philippines bond due 2025 finished at 103.67, down from Wednesday's 104¼ bid.

In Latin America news, Brazil's IPCA consumer inflation index rose 0.44% in October, coming in line with market expectations.

The report was seen as providing further evidence that the country's central bank will hike the benchmark Selic lending rate at its Nov. 16-17 monetary policy meeting.

Also more economic data out of Mexico suggests a more aggressive monetary policy may be coming. Industrial production rose by 5½% September, its fastest pace in six months.

The Bank of Mexico is expected to tighten rates on Friday and most likely at the following meeting on Nov. 26.

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