Emerging market prices up in light trading; Russia's mystery buyer

By Reshmi Basu and Paul A. Harris

New York, Dec. 20 - Emerging market debt prices rose in thin trading Monday, as most investors shut down ahead of the holidays.

"The tone is positive heading into year-end," said a trader. "There are still some bidders out there, but trading is light - no drastic movers," he said.

During Monday's trading session, the Brazil C bond added 3/8 of a point to 102 bid while the bond due 2040 gained ¾ of a point to 118.70 bid.

Mexico's bond due 2009 lost 0.050 to 122¾ bid. The Panama bond due 2008 gained 0.15 to 111.15 bid while the bond due 2027 added 0.65 to 110.65 bid.

Turkey's bond due 2030 rose ¾ of a point to 144¼ bid. And Venezuela's bond due 2027 was up 0.60 to 105.80 bid.

"Trading was really quiet," said a buyside source. "Everyone is closing down early."

"Very thin [trading] or dealers marking it up," noted the source.

Meanwhile, Brazil recorded its first current account deficit in seven months. The country reported a $242 million current account deficit in November contrasted with a surplus of $1.01 billion a month before.

Russia's paper okay on mystery buyer

It was a session mostly void of headline news and trading, said the buyside source.

However, there was speculation Monday as to whether Baikal Finance Group, the winner of Sunday's bid for oil firm Yuganskneftegas, was a front for gas monopoly Gazprom.

The little known Baikal won the auction, agreeing to put up $9.4 billion for the subsidiary of dismantled Yukos.

"It was a new company that appeared out of the blue and people feared that it might be a vehicle through which Gazprom is trying to get their hands on Yuganskneftegas," said the buyside source.

Most had speculated that Gazprom would win, but is believed to have lost financing when a U.S court barred it from taking part in the auction and barred international banks from delivering funding.

Last week, Yukos filed for Chapter 11 bankruptcy protection in the United States in an attempt to halt the auction of its most lucrative subsidiary over a $20 billion back-taxes bill that the government said it owed.

However, with general trading being so muted, the news had little impact on Russian paper, said the source.

"Again, it's been dead. No trading," said the buyside source.

During Monday's session, Russia's 2007 paper fell 0.19 to 113.06 bid while the bond due 2010 was unchanged at 110¼ bid. The bond due 2028 was unchanged at 163 bid. And the bond due 2030 was up 0.312 at 102.562 bid.

The Aries bond due 2014 backed by Russian debt was unmoved at 121¼ bid.

TuranAlem's spreads widen on CEO's death

In corporate news, Yerzhan Tatishev, chairman and chief executive officer of Kazakhstan's Bank TuranAlem died Sunday in a hunting accident.

A market source told Prospect News that spreads on the bank's bonds widened about 15 basis points on the news in very light trading.

Last week, the bank said it was increasing the size of its planned new issuance for 2005 to $1.5 billion. That number included syndicated loans, securitized debt anddollar- and ruble-denominated paper, said the source.

"With the death, they may lower the amount and rethink the plan," said the source.

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