JG Summit prices upsized deal; market sees another all-time tight on EMBI

By Paul A. Harris

St. Louis, Jan. 11 - While sources were marking emerging markets unchanged in terms of dollar price late Wednesday, a sell off in U.S. Treasuries caused spreads to grind in to another new all-time tight level.

Late in the afternoon one source spotted JP Morgan's EMBI-plus index at a spread of 224 basis points, six bps tighter on the session.

In the primary market, a Philippines corporate issue from JG Summit was upsized by $100 million and priced on top of downwardly revised price talk in a deal that was said to have gone very well.

Digesting the supply

There seemed to be a consensus among sources Wednesday that the market has shown an ability to digest the burst of sovereign issuance - just shy of $7 billion of it in dollar-denominated deals - seen in the first seven sessions of 2006.

The latest, in terms of benchmark sovereign issues, came Tuesday in the form of a $1 billion issue of 7 1/8% notes due 2037 from Brazil.

Enrique Alvarez, Latin America debt strategist at think tank IDEAglobal, said that Brazil's new bonds were holding in, and spotted them late Wednesday at 95.30 bid, up from the 94.88 issue price.

"One source told me the bid-to-cover was three-to-one," Alvarez disclosed. "Another said two-to-one.

"Overall there was good support for the deal.

"Now the question is 'Will the long end of Brazil hold up with another $1 billion in there?

"It seems to be doing so today, but that could be post-issuance support from the underwriter."

Alvarez spotted Brazil's existing benchmark 11% dollar-denominated global bond due in 2040 - commonly understood to be a bellwether of the emerging markets - at 130.25 bid, 131.25 offered, slightly higher. Earlier another source had them at 130.60 bid, 130.70 offered, basically unchanged on good two-way flow.

Other Latin American global bonds were flat to slightly higher, the strategist said.

Ecuador was down a quarter of a point, with its dollar-denominated 9% bonds maturing in 2030 trading at 93.25 bid, 94.90 offered.

Elsewhere, Alvarez said, Colombian debt was up a quarter, while Mexican debt was off about 0.15 across the curve.

Peru, which lately has been underperforming the rest of Latin America, saw an improvement on Wednesday. The recent drag on the prices of Peru's bonds has been attributed to the rise in pre-election polls of Peruvian Nationalist Party candidate Ollanta Humala, who has been campaigning for tighter central control over Peru's energy assets.

However on Wednesday Peru's dollar-denominated 8¾% bonds due 2033 were at 113.60 bid, 114.60 offered, up 0.35 on the day, according to Alvarez.

Also higher was the debt of Panama, which announced Tuesday that it will attempt to exchange existing issues for a new dollar-denominated amortizing global bond due 2036.

Alvarez also spotted Venezuelan debt up half a point on the day.

The IDEAglobal strategist said that in the wake of Brazil's benchmark issue Tuesday everything is quiet on the sovereign new issue-front.

But, he added, Peru and Colombia could come to market.

Alvarez also pointed out that Uruguay, which received an upgrade in its credit outlook from Standard & Poor's to positive from stable, might make an appearance.

Even though Uruguay tapped the market twice in September, it might return - having already announced an intention to raise $500 million in 2006 - having liked the results of Brazil's deal on Tuesday.

JG prices upsized $300 million

Terms emerged on a corporate deal from JGSH Philippines, Ltd., a wholly owned offshore subsidiary of conglomerate JG Summit Holdings, Inc.

The company priced an unrated upsized $300 million issue of putable fixed-rate notes at par to yield 8%. The deal, increased from $200 million, priced on top of the revised 8% price talk, which had earlier been reeled in from 8¼% area.

Credit Suisse First Boston ran the books for the debt refinancing and general corporate purposes deal.

A trader who focuses on Asian fixed-income securities said that the book size for the JG Summit deal was heard to be in excess of $1 billion.

The trader added that the issuer is fairly well known and comparatively easy for the market to deal with.

A week ago the Philippines priced approximately $2.10 billion of new global bonds in two tranches.

On Wednesday the trader said that both issues were still doing okay.

The dollar-denominated 7¾% bonds maturing in 2031, which priced at 98.641, have been trading in a 99.50 bid, 100 offered context, the trader said - although the source added that he had seen none of them trading Wednesday.

The euro-denominated 6¼% notes maturing in 2016, which priced at 99.112 "became quite technical very quickly," the trader said, adding that the euro-denominated notes had traded as high as 102.25 bid, and were presently wrapped around 102 bid.

"We still have a hiatus for about 10 days, waiting for the Lunar New Year celebrations," the trader remarked on the Asian market.

"A few deals could get squeezed in before then, and the pipeline seems solid afterwards," the source added.

Excelcomindo tightens talk

Elsewhere Indonesian telecom Excelcomindo Finance Co. BV revised the price talk on its $250 million offering of seven-year global bonds to 7¼% to 7 3/8% from the 7½% area on Wednesday.

The B1/BB- deal, led by CIMB, JP Morgan and UBS Investment Bank, is expected to price on Thursday.

The trader commented that Excelcomindo looks quite attractive to secondary levels.

Price talk also emerged on The National Gas Co. of Trinidad and Tobago Ltd.'s $400 million offering of 30-year senior unsecured notes, which are talked at Treasuries plus 225 basis points area.

Citigroup and Lehman Brothers will be joint bookrunners for the A3/BBB+ rated deal.

Headline scares subside

Elsewhere, headline-generated sell-offs in the debt securities of Turkey and Ukraine appeared to have subsided for the present.

News of Turkey's 15th confirmed human case of bird flu and a massive poultry-slaughtering program underway in several parts of the country caused the entire Turkish curve to sell off on Tuesday.

However one source had the Turkey sub-index of the EMBI tighter by eight basis points to a spread of 213 basis points late Wednesday afternoon.

A trader said that Turkey got hit Tuesday, but came back in the last 12 to 24 hours.

A source also saw stability in Ukrainian global bonds which earlier in the week sold off when Ukraine's parliament voted to sack prime minister Yuri Yekhanurov's government over the Ukraine's gas deal with Russia. Ukraine will pay nearly twice as much for its gas imports this year.

Earlier in the Wednesday session a source had spotted Ukraine's dollar-denominated 7 5/8% bond due November 2013 at 107 bid, 107.75 offered, down from Tuesday's 107.25 bid.

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