Emerging markets slowed by Greece, Goldman news; BicBanco, New World price; Russia on tap

By Christine Van Dusen

Atlanta, April 20 - The steady pace of new issuance in emerging markets continued Tuesday, albeit at a slower pace, as overall sentiment improved but concerns about Greece, Goldman Sachs and Dubai World hung over investors' heads, market sources said.

"It seems like a recovery of sentiment," an emerging markets strategist said. "The market's up. Spreads on average are tighter by 1 basis point."

Argentina is up, he said, and "Venezuela is up about a point and a half. So the high-beta credits seem to be doing well, which is a good indicator of what investors are feeling."

Another sovereign caught the strategist's eye: Egypt, which is measuring investor demand for a possible 10-year benchmark-sized issue of notes.

"Elections are coming up, and regardless of that there has been ongoing uncertainty regarding the succession, given the health of Mubarak and the fact that there are no clear chosen successors," he said. "There's a concern that political unrest might be around the corner. I'm fascinated to see how well the new Egypt 10-year will do."

Awaiting Russia deal

Another sovereign of interest this week is Russia and its planned two-tranche, dollar-denominated eurobond.

"We've got the new dual-tranche Russian sovereign to look forward to later this week," a London-based trader said. "That's giving a boost to the market."

Price talk for the deal was set at Treasuries plus 125 bps for the five-year notes and Treasuries plus 137.5 bps for the 10-year notes, the trader said.

"I don't know the size, but I expect it will be large," he said.

The deal "looks expensive, but it's Russia, and there's nothing else out there," he said. "And we live in a world where I guess Russia is considered better than Europe or the states, or at least is in the same basket."

Investors are "eagerly anticipating" that deal, the strategist said. "I'm sure it will be snapped up with ease."

Goldman, Greece concerns

All of this takes place against the backdrop of continuing difficulty for Goldman Sachs and Greece.

Goldman Sachs on Tuesday reported strong earnings of $3.29 billion as the investment bank faced British allegations of fraud similar to those lobbed by the Securities and Exchange Commission in a recent lawsuit. The company is accused of misrepresenting information about collateralized debt obligations connected to subprime mortgages.

This, plus continued uncertainty about whether debt-heavy Greece would take international aid as a Wednesday meeting on the matter approached, loomed large on Tuesday.

"It's all the same news on them," he said. "It's the development of existing stories, and that's not likely to change."

Another old story that's rearing its head again is Dubai World's restructuring of about $24 billion in debt.

The recent pricing of Dubai Electricity and Water Authority's $1 billion notes due 2015 at par to yield 8½%, or Treasuries plus 592.4 bps, has hurt Dubai World's plans for offering a 1% interest rate on some of the $24 billion in debt that's currently being restructured, market sources said.

NWR, BicBanco price

But none of this stopped some issuers from bringing new deals to market on Tuesday.

Amsterdam-based New World Resources Corp. priced a €475 million issue of eight-year senior secured notes at par to yield 7 7/8%.

And Brazil's Banco Industrial e Comercial SA (BicBanco) priced $300 million 8½% tier 2 notes due 2020 at 99.174 to yield 8 5/8%, or Treasuries plus 480.2 bps, market sources said.

Overall, the market was "stronger" on Tuesday, the London trader said. "It's generally better."

New World prices notes

New World Resources priced a €475 million issue of eight-year senior secured notes (Ba3/BB-) at par to yield 7 7/8% on Tuesday, according to market sources.

The yield printed at the tight end of the 8% area price talk.

Goldman Sachs & Co. was the left bookrunner. JPMorgan and Morgan Stanley were the joint bookrunners.

Proceeds will be used to refinance bank debt.

The company is an Amsterdam-based central European coal producer with operations in the Czech Republic.

BicBanco prices tier 2 notes

Brazil's Banco Industrial e Comercial priced $300 million 8½% tier 2 notes due 2020 (Ba2) at 99.174 to yield 8 5/8%, or Treasuries plus 480.2 bps, according to an informed market source.

HSBC, JPMorgan and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal, which was talked at 8¾%.

BicBanco is a Sao Paulo-based lender.

Russia talks deal

The Russian Federation (Baa1/BBB/BBB) set price talk for its two-tranche dollar-denominated eurobond deal at Treasuries plus 125 bps for the five-year notes and Treasuries plus 137.5 bps for the 10-year notes, according to a London-based market source.

The sovereign is expected to release pricing information for the deal on Friday.

"The pricing is penciled in for Thursday, so we'll see it during Friday's business," the source said.

Barclays Capital, Citigroup, Credit Suisse and VTB Capital are the bookrunners for the Rule 144A and Regulation S offering, which wraps up its roadshow Wednesday in New York.

Egypt could issue notes

Egypt is measuring investor interest in a possible 10-year benchmark-sized issue of notes, according to a market source.

The sovereign "has been in a roadshow for a while and has been building books," an emerging markets strategist said. "They're trying to get a feel for what investor demand will be on that."

A deal could come to market as soon as this week, he said.

Paul A. Harris contributed to this report

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