Emerging markets mixed to stronger; Tone ends positive; Grupo Televisa prices $500 million

By Aaron Hochman-Zimmerman

New York, May 6 - Emerging markets felt jittery in the morning with Fannie Mae's losses, but along with equities, credits were able to shake off the gloom.

By the end of the day, Cisco Systems Inc. steadied the market by staying ahead of expectations, a trader said.

"We switched tone in the afternoon," he added.

Argentina saw slight improvement of its benchmark discount bonds due 2033, even though negotiations over export taxes brought little progress for the government or the farmers.

Still, investors were happy to see a healthier pipeline brim over with $500 million 10-year bonds from Mexico's Grupo Televisa SAB.

"Volatility is low," a syndicate desk official said, although "I don't think we're out of the woods yet."

Volatility rolled downhill all day to end lower by 0.69 at 18.21, according to the VIX index. The index is a frequently used gauge of market volatility.

LatAm trades up on strong tone

Latin America's trading saw a few swings, but investors were still feeling the sun on their faces.

Even with heightened tensions in Argentina, new issues were sprouting up and prices were climbing, a syndicate desk official said.

As oil prices continued to break records, Venezuela's 9¼% sovereigns were up 0.5 point at 92.25 bid.

The price of light sweet crude climbed close to $123 per barrel during the session.

Meanwhile, Brazil's highly traded 11% government bonds due 2040 were up just slightly at 136.8 bid.

Farmers, government talk business

In Argentina on Tuesday, little progress was reported during meetings between farm representatives and cabinet chief Anibal Fernandez.

On Monday, the government announced a relaxing of restrictions on beef exports one day ahead of the meetings, according to the Buenos Aires Herald, but despite the new leniency on the part of the government, farmers were still skeptical a deal could be reached over taxes on grains and soy beans.

No roadblocks were reported, but farmers did stage protests to the side of major highway intersections, the report said.

The 8.28% Argentine discount bonds due 2033 were better by 0.1 point at 80.95 bid.

LatAm corporates push pipeline

Deals have been finding daylight in the primary more and more frequently as "the market is starting to open up," a syndicate official said.

"I think people started to realize that if they don't put any money to work they're not going to make any money this year," he said.

Grupo Televisa SAB (Baa1/BBB/BBB+) priced $500 million 6% 10-year senior unsecured bonds at 99.28 to yield 6.097%.

The deal matched its talk at Treasuries plus 220 bps.

HSBC and JPMorgan acted as bookrunners for the deal.

There is a change-of-control put at 101%.

The bonds can be made whole at a penalty of Treasuries plus 30 bps.

Proceeds will be used for general corporate purposes and to repay outstanding debt.

Grupo Televisa is a Mexico City-based media outlet.

Meanwhile as Argentina's beef export regulations were easing back, Brazil's beef producer Independencia International Ltd. announced plans to offer a $250 million seven-year bond.

ABN Amro and Banco Santander will act as bookrunners for the deal.

Independencia is a Jordanesia, Brazil-based and Cayman incorporated beef producer.

"It will be interesting to see how this goes given that Santander is not really a name that one thinks of when it comes to trading the U.S. dollar Brazilian beef sector," a strategist said.

"I also am surprised that they didn't opt to get another bank involved in supporting the bonds in secondary; in these markets that would be worth a lot and it would not have cost Independencia anything," the strategist said, adding the deal may price as early as Thursday.

In Europe, the Netherlands' Plaza Centers NV (Aa3, local) priced an NIS 85 million add-on to its 5.4% unsecured non-convertible series B notes due 2015. The total amount of the issuance is now NIS 798.5 million.

The notes will pay an interest rate of 2.056% until June 30.

Plaza Centers is an Amsterdam-based property developer that operates primarily in Israel and emerging Europe.

Elsewhere, China's Huaneng Power International Inc. announced plans to issue 4 billion yuan 10-year bonds with an interest rate between 5.1% and 5.4%.

The bonds will be offered at par on Thursday.

Huaneng Power is a Beijing-based independent coal power producer.

Asia better in afternoon

Asian trading "was relatively quiet" on a "mixed day" for prices, a trader said.

"It opened up weak and closed a little firmer," he added.

In the Philippines, the government has serviced PHP 239.3 billion in debt in the first quarter, which is PHP 61.7 billion higher than during the same period of 2007, the Manila Times reported.

Of the total, PHP 183.5 billion was paid to domestic lenders, the report said.

Over the course of the year, the government is expected to service PHP 607.2 billion during 2008, slightly less than the PHP 614 billion paid last year.

The Philippine government bonds due 2030 dropped 0.375 point to 131.125 bid, 131.625 offered.

Meanwhile in Indonesia, president Susilo Bambang Yudhoyono said the country may leave the Organization of Petroleum Exporting Countries (OPEC) to focus on its own production.

Even with oil subsidies, which are expected to be cut, the country has still recently been an oil importer.

As protests broke out over the proposed cuts in subsidies, a BBC market analyst said Indonesia would now benefit more from lower oil prices.

The Indonesian sovereigns due 2017 were lower by just 0.125 point at 101.875 bid, 102.625 offered.

In Pakistan, a ceasefire between the government and militants was put in jeopardy by a suspected suicide attack, which killed four in northwest Pakistan, according to a BBC report.

Also, two policemen were killed by armed militants in the Swat valley.

The violence comes after militant leader Baitullah Mehsud ended talks with the government.

Mehsud is suspected in the death of former prime minister Benazir Bhutto.

Emerging Europe mixed

Emerging Europe traded lightly with mixed results, but the tone continues to remain high as equities continue to fight off bad news.

In Russia, the city of Moscow announced its 2008 budget will reach 1.2 trillion, according to the Itar-Tass News Agency.

The capital city accounted for 9.4% of the country's growth in 2007 while the industrial sector made up the largest part of Moscow's growth at 10%, said Georgy Muradov, the director of the foreign economic and international relations of the city of Moscow.

Also Russia signed an agreement dealing with civilian nuclear power with the United States.

The deal is expected to increase trade between the two countries.

Meanwhile, Georgia's breakaway region of Abkhazia asked Russia to take military control of the region in exchange for a guarantee of security, Itar-Tass reported.

The statement from the foreign ministry of unrecognized Abkhazia included designs for independence "that would fully meet the interests of both sides, without giving rise to excessive irritation among Moscow's leading international partners," said Sergei Shamba, of Abkhazia.

The Russian sovereigns due 2030 were quoted at 115.2 bid.

In Turkey, foreigners will face further restrictions on the purchase of property after a ruling from the constitutional court, the Turkish Daily News reported.

Foreigners may only buy up to 10% of land included in a development plan for a particular district, according to the new ruling.

A new bill in the parliament would also give the cabinet authority to prevent the purchase of interests in water, energy, mining, agricultural or parcels with historic or religious importance.

The Turkish government bonds due 2030 were seen at 153.25 bid.

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