Emerging markets quiet, firm; Columbus International prices; Axis shelved; CDS widen

By Christine Van Dusen and Paul A. Harris

Atlanta, Nov. 13 - Emerging markets remained relatively quiet and firm Friday as the heavy supply of paper reduced and investors continued to look ahead to the end of the year, market sources said.

"The market was trading a little heavy, heading into the weekend" at the European close, according to a London-based source. "There's not much depth around."

New issuance has slowed, and "the overall market's still firm," a New York-based trader said. "Things seem to have been quieting down. It seems like the supply is definitely easing off."

The trader pointed to pricings that came through this week, including Banco Santander Chile's $500 million issue of three-year notes at a 157 bps spread to Treasuries, Commercial Bank of Qatar's $1.6 billion two-tranche bond offering, Oversea-Chinese Banking's $500 million step-up notes with a five-year call, priced at 4.25%, Prague-based CEZ as's €110 million bonds at a coupon of Euribor plus 45 bps, and Poland-based TVN Finance's €405 million issue of 10 ¾% eight-year notes priced at 98.696 to yield 11%.

Also notable, the source said, was the fact that Hong Kong's Hutchison Whampoa Finance Ltd. launched and priced in one day its €1.74 billion seven-year notes at swaps plus 165 bps.

"Some deals came really quickly this week, so we can't rule out the fact that there might be some more coming through," the trader said. "But it doesn't feel like there's that much in the way of the big-ticket deals and long roadshows. Overall the market is firm and has done some digesting, and is looking forward to a period of relative calm."

One deal disappears, another is delayed

Meanwhile, one deal disappeared: Mumbai, India-based Axis Bank has shelved its planned dollar-denominated offering of benchmark bonds following a recent roadshow, according to an informed market source.

And Indonesian ethylene and propylene producer PT Chandra Asri Petrochemical still hasn't priced its $250 million five-year bonds that launched in late October with DBS Securities and Deutsche Bank. Pricing was expected to come through the week of Oct. 26, following a roadshow for the Jakarta-based company.

"They're trying to get that done before the year end, but I think it's quite difficult to get it done," a trader said. "It's a pretty complicated structure, and also there's some history with the name from the 1990s which might still have some bearing."

Outflows reverse; credit default swaps widen

Overall, emerging markets and high-yield bond funds ended the week with the tide turned, rebounding from the previous week's outflows, according to data service EPFR.

"Flows into emerging markets bond funds were evenly divided between funds investing in hard currency debt and those focused on local currency bonds as the spread between US Treasuries and JP Morgan's benchmark EMBI+ index continued to fluctuate around the 300 basis points level," the company reported.

Also on Friday, five-year credit default swaps widened following Thursday's across-the-board tightening. Argentina rose 5.515 bps to close at 1,014.53 bps mid. Brazil closed at 119.885 bps mid, 0.18 bps wider. Russia closed at 178.49 bps mid, 0.75 bps wider and Venezuela closed the day at 1,051.6 bps mid, 11.7 bps wider. Among the sovereigns, only Mexico tightened, closing 2.27 bps lower at 143.295 bps mid.

In corporates, OAO Gazprom closed at 234.335 bps mid, 0.27 bps wider. And Russia's VTB Bank closed at 339.3 bps mid, 2.16 wider.

Columbus International prices $450 million

In primary news, Barbados-based cable network services provider Columbus International, Inc. priced a $450 million issue of five-year senior secured bullet notes (B2/B) at par to yield 11 ½% on Friday, according to an informed source.

The yield printed at the wide end of the 11% to 11½% price talk.

Both emerging markets accounts and high-yield accounts participated in the deal, the source said.

"It's trading very well, most recently at 102.5 to 102.75," according to a New York-based investment banking source. "Very good participation from both emerging markets and high yield telecom investors in the U.S. and Europe."

Another source attributed the price gain to the fact that it was a slow Friday.

Citigroup, Standard Bank and RBC Capital markets were joint bookrunners.

Proceeds will be used to fund a capital expenditure and to prepay operating company debt.

The issuer is a Barbados-based undersea cable network services provider.

India's Axis Bank decides against deal

Axis Bank has opted not to proceed with its planned dollar-denominated offering of benchmark bonds following a recent roadshow in Singapore, Hong Kong and London, according to an informed market source.

The bookrunners for the Regulation S transaction were Barclays, HSBC, JP Morgan and Standard Chartered Bank.

Axis Bank is Mumbai, India-based financial services company.

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