Emerging market bond issuance increases; Turkey prices $1.5 billion bonds; Mexico locks down

By Aaron Hochman-Zimmerman

New York, April 30 - Emerging markets turned in a mixed performance as equities tripped after running strong out of the gate.

Investors were encouraged by strong inflows into the category.

The week ending Wednesday marked the third straight week of inflows, according to an EPFR Global press release.

For the entire month of April, issuance was up sharply as the banks were seen to price $22.59 billion over 21 deals, compared to just seven deals worth $5.85 billion in March.

Year over year, issuance improved versus the $9.14 billion in 24 deals completed April 2008.

Late in the day on Thursday, Turkey contributed $1.5 billion to the monthly issuance totals by pricing its 10-year bonds to yield 7.6%.

Meanwhile in the major markets, equities began the day on a sharp upward trajectory but floundered in the afternoon to close flat. Volatility sank initially but found its way higher by the close to end higher by 0.42 to 36.50, according to the VIX index. The index is a common measure of market volatility.

Turkey prints $1.5 billion

Turkey priced $1.5 billion 10-year bonds at 99.285 with a coupon of 7½% to yield 7.6%, or Treasuries plus 447.9 basis points (Ba3/BB-/).

The bonds priced on the tight end of talk, which was in the 7¾% area.

Bank of America and JPMorgan acted as bookrunners for the registered deal.

Proceeds from the sale will be used for general budgetary purposes.

As a comparison, Russia's quasi-sovereign OAO Gazprom (Baa1/BBB/) priced a $2.25 billion 10-year bond to yield 9¼% on April 17.

Turkey is still expected to reach a new arrangement with the International Monetary Fund for a standby loan.

New life in gas talks

Meanwhile in Russia, the January gas dispute with Ukraine left Kiev with an insufficient gas reserve to be a reliable supplier of energy to Europe, said deputy prime minister Igor Sechin, according to the Itar-Tass News Agency.

"In order to maintain uninterrupted transit of Russian gas to the European consumers, Ukraine must purchase and pump into underground storages no less than 19.5 billion cubic meters of gas in the near future," Sechin said in the report.

Also, prime minister Vladimir Putin reiterated his claim that Russia is willing to solidify the energy relationship between itself, Ukraine and Western Europe.

"We are ready to work on drafting a new, promising agenda of relations between our countries in all areas, primarily in the economic sphere," Putin said after his meetings with Ukraine prime minister Yulia Timoshenko.

Also in emerging Europe, South Africa's rand was seen stronger after an anticipated 100 bps interest rate cut to 8½%.

The rand was seen trading at 8.462 to the dollar.

Mexico closes up shop

Mexico president Felipe Calderon spoke on television and ordered government offices closed. He also asked that all non-essential businesses remain closed through next Tuesday, reports said.

"There is no safer place to protect yourself from catching swine flu than in your own house," he said.

The Mexican government has been commended by the World Health Organization for its handling of the flu outbreak.

The peso saw some effects from a worldwide worry about the far reaching effects of the virus.

The peso was seen trading at 13.805 to the dollar.

High volumes in Asia

Flows in Asia were heavy, a trader said, but the region seemed least effected by the flu outbreak.

Still, volatility in the sector came in the form of civil unrest.

In Pakistan, fighting continued but now is now centered on the area of Karachi where paramilitary forces were deployed to stabilize ethnic clashes between Urdu-speaking Pakistanis and ethnic Pashtuns, reports said.

Security forces were reportedly given a "shoot on sight" order to quell violence after dozens were believed to have been killed.

Also in Asia, in Indonesia U.S. oil firms ExxonMobil Corp. and Hess Corp. offered investments totaling $66 million over the next three years for exploration rights in eastern Indonesia, the Jakarta Post reported.

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