Venezuela unveils $3 billion deal; Iran plans €1 billion; EM flat as quarter end approaches

By Paul A. Harris

St. Louis, Sept. 28 - Despite rallying U.S. stock prices, emerging markets debt was unchanged in Monday trading, according to a buy-side source.

The EMBI-Plus index finished the day at 341 basis points bid, 1 bps wider on the session.

The quiet state of emerging markets on Monday might in part be attributable to Yom Kippur, which saw a lot of market participants off work, the buy-sider conceded.

More important, however, is the approaching close of 2009's third quarter on Wednesday, the source specified.

People are being cautious with respect to the economic and financial numbers that will surface when the new quarter begins, the buy-sider said.

Venezuela to auction $3 billion

Republica Bolivariana de Venezuela (B2/BB-/B+) plans to auction $3 billion of bonds, according to a market source.

The issuance will be comprised of $1.5 billion of bonds that will mature on Oct. 13, 2019, and $1.5 billion that will mature on Oct. 13, 2024.

Venezuela will announce minimum and maximum price ranges on Tuesday.

Deutsche Bank and Citigroup will run the books for the Regulation S deal.

The announcement did not have a dramatic impact on existing Venezuela paper, according to the buy-side source.

The benchmark Venezuela 9¼% global bonds due September 2027 were unchanged at 78.90 bid, 79¼ offered.

The new bonds are coming in a Regulation S deal and will be marketed to locals, the buy-side souce said, adding that the proposed bonds can't be taken by U.S. accounts until 40 days after they settle.

Nor did word of substantial supply out of Venezuela seem to register an impact on any of the rest of the high-beta Latin American sovereign paper, the buy-sider said.

Argentina's benchmark 8.28% dollar-denominated discount bonds due in 2033 were ½ point higher at 67.35 bid, 68 offered, as the New York close approached.

Iran announces €1 billion

Iran plans to offer €1 billion of bonds by December to help finance development of its largest natural gas field, according to information posted on Shana, the official web site of the Iranian oil ministry.

"Issuance of the bonds is expected to be finalized in two months," Mohammad Hassan Mousavizadeh, a senior adviser to Iran's Pars Oil and Gas Co. (POGC).

State oil giant the National Iranian Oil Co. has already given POGC permission to issue the bonds.

Iran plans to invest around $40 billion to develop the South Pars field through 2015. The field is part of the huge formation shared with Qatar that makes up the world's largest pure gas reserve.

Mousavizadeh said in July the bonds would be offered to both Iranians living abroad and foreign investors.

Iran may need some luck getting the deal done, according to the buy-side source.

That is because the international community perceives Iran to be purposefully working toward the development of atomic fuel for nuclear weapons. If, in response, the U.S. succeeds in putting in place stiffer international sanctions against Iran, the planned bonds could be an encumbered asset, from the moment they are printed, the source said.

Not even Iran's Middle Eastern friends would likely be happy about getting into an asset such as that, the buy-sider added.

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