Emerging market debt tracks U.S. markets higher; two corporates issue bonds

By Reshmi Basu and Paul A. Harris

New York, Oct. 26 - Emerging market debt continued to see positive momentum Thursday on the back of strong performances by U.S. core markets.

On the primary front, two corporates priced deals.

Out of Russia, Renaissance Securities Trading Ltd. placed a $250 million issue of three-year guaranteed notes (Ba3/B+/BB-) at par to yield 8¾%, according to a market source.

The deal came at the tight end of price guidance, which was set at 8¾% to 9%.

Citigroup and Credit Suisse were joint bookrunners for the Regulation S transaction, which was launched under the issuer's euro medium-term note program.

And Kazakhstan's KazakhGold Group Ltd. sold an upsized offering of $200 million in seven-year senior fixed-rate notes (//B-) at par to yield 9 3/8%.

The deal, which was increased from $150 million, priced inside of price guidance for a yield in the 9¾% area. The notes will be non-callable for four years.

ING was the lead manager for the Regulation S transaction.

EM higher

Emerging market debt was firmer Thursday, supported by solid performances in both U.S. stocks and the Treasury market. The session saw a continuation of Wednesday's late afternoon rally, which was triggered by the Federal Reserve's decision to leave fed fund rates unchanged.

The accompanying statement reinforced the view that the Federal Reserve will be on pause until early next year, which has raised investors' appetite for risk, noted a market source.

In the absence of any country-specific drivers Thursday, emerging market debt moved up as the yield on the 10-year Treasury note stood at 4.73%, down from 4.77% from the prior session.

"Across the board, everything was higher, particularly the long end," remarked a trader.

During the session, the bellwether Brazilian bond due 2040 gained 0.65 to 131.45 bid, 131.50 offered. The Argentine discount bond due 2033 gained 0.75 to 100.70 bid, 101 offered. The Colombian bond due 2033 advanced 1.15 to 138.15 bid, 139 offered.

"The market is in good shape," added the trader.

"Of course, valuations are a worry for everyone. But everything is in place for the market to continue to rally," he added.

Uruguay announced pricing

In other news, Uruguay announced the pricing of its new bonds in connection with its tender offer. The bond 2022 will be priced at 106.75 and the bond due 2036 will be issued at 100.75.

In the secondary, the 2022 bond was spotted at 106 bid, 107 offered, down 0.25 while the 2036 bond gained 0.25 to 100.25 bid, 101.25 offered.

MagnaChip bounces wildly around

MagnaChip Semiconductor Ltd.'s bonds were heard to have gyrated wildly as the Korean chipmaker reported earnings.

The debt was was swinging violently from down as much as 5 points, back up to up 2 or 3 after it posted results.

A trader saw the company's 8% notes due 2014 plunge to 47 bid, 48 offered after the results were released, a loss of about 4 or 5 points, he said,

But then, "after a conference call on which they indicated that they had sufficient cash and gave their forecasts for the quarter," the bonds moved back up, to 54.5 bid, 55.5 offered, which he called a gain of about 4 points on the session.

The Korean high-tech firm had a net loss for the fiscal quarter ended Oct. 1 of $47.7 million, sharply wider than $13.2 million in the third quarter of 2005.

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