Emerging markets subdued; Panama cancellation raises concern; Paraná Banco prices

By Christine Van Dusen

Atlanta, Dec. 18 - Emerging markets were very quiet Friday as investors and issuers looked to be closing up shop a bit early in advance of the holidays and year-end, market sources said.

"I think today was the end of the market," a London-based source said. "I don't think we'll see anything next week. As a syndicate manager I would really struggle to make a recommendation to anybody to come to market next week unless I knew they had very strong reserves.

"Inevitably people will not be around," he said. "There's a big difference between this week and the first week of January."

He believes the new issues from Latin America at the end of the week - Paraná Banco SA priced $100 million of 7 3/8% bonds due 2012 at 99.015 to yield 7¾% on Friday and Banco Santander Chile priced a $300 million reopening of three-year 2.875% bonds on Thurdsay - could be the last to squeeze in before 2010.

The Banco Santander deal, via Deutsche Bank, was upsized from $250 million and priced at 106.01 to yield 2.657%.

"It's a small-sized deal," the London-based source said. "I think it's a non-event."

Another Latin American issuer was on investors' minds on Friday: The Republic of Panama. On Thursday the Banco Nacional de Panama canceled plans to sell global bonds totaling $759.72 million due 2036, 2034 and 2027 via Citigroup. The cancellation came after an auction of the 2036 bonds that attracted $600 million in bids but did not bring in prices "compatible with the requirements of the fiduciary fund," according to a filing by Banco Nacional de Panama with the Securities and Exchange Commission.

This was blamed on bad timing, market sources said, and led investors to worry about the sovereign's debt supply.

In the secondary, things were also fairly quiet on Friday, a New York-based strategist said. "If there's any activity it's not really reflective of anything significant," he said. "It's dealer-driven. The dollar is making headway but nobody is panicking. It's not suggestive of anything."

Spreads on Friday were "tighter," he said.

Heading toward the European close, "there were no major moves," the London source said. "People are taking off earlier than you would expect."

The strategist saw the same trend later near Friday's New York close.

"It's a dead market; nothing is happening," he said. "Next week is going to be just like today, if not worse. The seasonal doldrums have set into the market, and we're unlikely to see a resumption in volumes until mid-January."

Paraná Banco prices

Paraná Banco SA priced $100 million of 7 3/8% bonds (B+//) due Dec. 21, 2012 at 99.015 to yield 7¾%, according to an informed market source.

The bookrunners for the Regulation S deal were Jefferies & Co. and Queluz.

Paraná Banco is a commercial bank based in Paraná, Brazil.

Banco Santander Chile prices

Banco Santander Chile priced a $300 million add on to its 2.875% bonds due 2012 (Aa3/A+/) at 106.01 to yield 2.657%, according to a market source.

The tap issue came to market via Deutsche Bank and was upsized from an initial $250 million.

Proceeds will be used for general corporate purposes.

Banco Santander Chile is a Santiago-based subsidiary of financial services company Grupo Santander.

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