Emerging market debt mostly sidelined ahead of Friday's payroll numbers; oil countries up on crude boom

By Reshmi Basu and Paul A. Harris

New York, March 2 - Emerging market debt moved higher Wednesday, as oil-producing countries saw better bids in response to prices hitting $53 per barrel.

Overall, the market continued to closely track a stationary U.S. Treasuries market, which has been on the defensive ahead of Friday's non-farm payroll numbers. The Treasury market found little direction in the testimony of Federal Reserve chairman Alan Greenspan Wednesday.

In front of the House budget committee, Greenspan spoke mostly on social security and other fiscal matters.

"Greenspan didn't reveal anything about [interest] rates," said a sellside source. "So now the [emerging] market turns to Friday for some guidance. Until then, it'll be lateral trading and sidelined investors," said the source.

In a dearth of economic information, U.S. Treasuries hardly moved. The yield on the 10-year note stood at 4.38%, marginally higher than the 4.37% on Tuesday.

The payroll numbers have had a hypnotic hold on investors, as few are willing to add risk ahead of Friday's release.

"People are focusing on the employment number on Friday and what that's going to give in terms of market direction," said a market source.

Oil producers up

In Wednesday's trading, higher oil prices were able to lure investors, with Ecuador, Mexico and Venezuela seeing higher price action, said a trader.

The Ecuador bond due 2030 gained 0.80 to 94.30 bid. The Mexico bond due 2010 was up 0.05 to 121.45 bid while its bond due 2033 added 0.l0 to 111 bid. Venezuela's bond due 2027 gained 0.30 to 103.90 bid.

Also in trading, the Brazil C bond slightly dipped 0.07 to 101.68 bid while the bond due 2040 added 0.10 to 116.65 bid.

Colombia up in trading

In Colombia, the government abandoned a policy aimed at curbing the rally of the peso against the dollar after two months. Under the policy, international investors had been required to keep their money in the country for at least a year.

During trading, the Colombian bond due 2012 was up 0.05 to 112.80 bid.

Finally, the primary market is on pause ahead of Friday, said the market source.

One source did tell Prospect News that Kazakhstan's ATF Bank is looking to do a Rule 144A/Regulation S deal.

The source added that Citigroup and Credit Suisse First Boston are expected to emerge as the bookrunners. The deal is most likely slated for March, according to the source.

In November, ATF priced $200 million bonds of 8 7/8% five-year eurobonds (Ba1/B/B+) at 99.014 with a spread of 580 basis points more than Treasuries.

ATF is the fourth largest private commercial bank in Kazakhstan and is based in Almaty.

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