Emerging market debt trades in tight ranges; Poland's Getin Bank to sell €150 to €200 million bonds

By Reshmi Basu and Paul A. Harris

New York, April 12 - Emerging market debt saw a subdued trading session heading into the holiday weekend.

In the primary market, Poland's Getin Bank SA set price talk for a €150 to €200 million offering of two-year eurobonds (Ba2) at three-month Euribor plus 220 to 240 basis points. The issuance will be structured as senior unsecured bonds.

Barclays Capital is the bookrunner for the transaction.

Pricing is expected to take place on Thursday.

Trading is winding down, noted an investor, who added that few were willing to add more risk ahead of next Tuesday's release of the minutes from the last Federal Open Market Committee meeting.

Nonetheless, even as trading volumes thinned out the asset class outperformed U.S. Treasuries on a spread basis, noted a trader.

On Wednesday, Treasuries saw a spike in yields as once again the yield on the 10-year note flirted with a 5% handle. By the close the yield on the 10-year note stood at 4.98% from Tuesday's close of 4.93%.

Meanwhile the JP Morgan EMBI Global Diversified Index tightened by four basis points versus Treasuries.

"There's not a lot of momentum," remarked the trader.

"It still appears to be range-bound."

Additionally, there were no breakout performers one way or another, observed market sources.

The trader added that most bonds moved with a quarter of a point in either direction.

During the session, the Brazilian bond due 2040 added 0.15 to 127.30 bid, 127.35 offered. The Ecuadorian bond due 2030 gained 0.25 to 99.60 bid, 100.25 offered. The Russian bond due 2030 shed 0.13 to 108.125 bid, 108.50 offered.

Peru mixed

Over to Peru, the race for second place in the presidential election is still too close to call, but former president Alan Garcia looks to have the edge over market-friendly Lourdes Flores.

With 87% of the voted tallied, Ollanta Humala has grabbed 30.97% of the vote. Garcia has garnered 24.44% while Flores is in third place with 23.37% of the vote.

Overseas and disputed votes are estimated at around 1.5 million to 1.6 million, but may not be enough to push Flores ahead of Garcia.

Trading has been choppy while the market reprices to the likely scenario of a run-off between nationalist Humala and Garcia.

As president of Peru from 1985 to 1990, Garcia led his country into a disastrous economic downturn, underscored by hyperinflation and human rights violations.

According to one analyst, Garcia's stronghold is in the north of Peru, which is outperforming other areas in terms of growth and employment. This means that Garcia has a strong incentive to back somewhat austere fiscal policies.

Nonetheless, another source noted that Garcia is indeed shrouded in uncertainty and the international community is skeptical of his ability to preside, which could mean more volatility ahead.

But the sharp widening in spreads may create an opportunity for investors to soak up some paper, said the source, adding the market is still on edge.

During the session, the Peruvian bond due 2015 lost 0.50 to 117.50 bid, 118 offered while the bond due 2033 gained 0.25 to 111.40 bid, 112.25 offered.

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