Silence on primary, secondary fronts ahead of U.S elections; Argentina files exchange with SEC

By Reshmi Basu

New York, Nov. 1 - Emerging markets trading was virtually in lock-down Monday a day ahead of the U.S. presidential elections.

"Extremely slow," said a trader. "No big moves one way or the other."

With voters heading to the polls on Tuesday, investors and issuers remain on the sidelines, hesitant to be exposed to potential market volatilities, said the trader.

In a thin day, Brazil was up. The Brazil C bond was up 0.312 to 99.562 bid while the bond due 2040 gained a quarter of a point to 113.05 bid.

The Ecuador bond due 2030 fell 0.050 to 84½ bid. Russia's bond due 2030 was up 0.312 to 100.312.

Trading was "very subdued," said Enrique Alvarez, Latin America debt strategist for think tank IDEAglobal.

"No liquidity," he added.

With president George Bush and senator John Kerry in a virtual tie in the polls, trading is expected to be range bound until a clear and decisive winner is announced.

"You have too much uncertainty. The polls are too tight in the U.S.

"I think the fear of everyone is that you are going to have a parallel situation to the 2000 election," said Alvarez.

And that lack of clarity is damaging to world markets, he said.

The uncertainty feeds on Latin American paper, because its performance hinges on the U.S. Treasury market. And the longer the elections are drawn out, the more volatile the Treasury market will be.

"And in the interim, you have a holiday in Brazil, which is giving the market more of a breather," said Alvarez.

"Things are slowing down, waiting for the U.S to go away."

The rudderless market will find direction, depending on the effects the elections have on the Treasury market and the U.S. dollar, noted Alvarez.

"Everything is very dependant on the election outcome."

Argentina submits plan to SEC

Argentina submitted its latest proposal to restructure $100 billion in defaulted debt to the U.S Securities and Exchange Commission. In a press conference in Buenos Aires, economy minister Roberto Lavagna provided a few details.

Some key points are as follows:

* Total debt to be restructured is $81.8 billion in principal plus $20 billion in past due interest.

* If less that 70% of bondholders accept the offer, the country will issue $38.5 billion in new bonds. If the rate is higher, $41.8 billion will be issued.

*The issue date will be moved forward six months to a retroactive date of Dec. 31, 2003 from June 30, 2004.

Details of the proposal came in line with market expectation, much of which was already priced into the market.

"From market action, everything is pretty much in line because prices are just a tick up," said Alvarez.

"But nothing has happened that has been earth shattering for Argentine prices.

The Argentina bond due 2008 was up ¾ point to 31¼ bid.

Elections in Latin America

The results of Uruguay's presidential elections came in line with market expectations. On Sunday, the country voted, choosing its first leftist president as Tabare Vazquez appeared to have won the presidency.

The Uruguay bond due 2015 was unchanged at 89 3/8.

In Sunday's municipal elections in Brazil, mayoral candidates supported by President Luiz Inacio Lula da Silva lost in Sao Paulo and Porto Alegre, as polls had predicted.

In Venezuela, president Hugo Chavez gained more momentum as coalition parties won 20 of 22 governors' races.

The Venezuela bond due 2027 slipped 0.050 to 102¼ bid.

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