Message-ID: <12290148.1075863369655.JavaMail.evans@thyme> Date: Tue, 28 Aug 2001 10:12:08 -0700 (PDT) From: karin.levin@enron.com To: jarek.astramowicz@enron.com, john.bottomley@enron.com, s..bradford@enron.com, london.brown@enron.com, rick.buy@enron.com, paul.chivers@enron.com, markus.fiala@enron.com, renata.frankova@enron.com, nigel.friend@enron.com, joe.gold@enron.com, david.gorte@enron.com, bjorn.hagelmann@enron.com, richard.harper@enron.com, olivier.herbelot@enron.com, andrew.marsden@enron.com, ted.murphy@enron.com, roderick.nelson@enron.com, mark.ruane@enron.com, bryan.seyfried@enron.com, eric.shaw@enron.com, john.sherriff@enron.com, stuart.staley@enron.com, antony.steiner@enron.com, padmesh.thuraisingham@enron.com, steve.young@enron.com Subject: Sovereign Bond Spreads, 24 August 2001 Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Levin, Karin X-To: Astramowicz, Jarek , Bottomley, John , Bradford, William S. , Brown, Michael - COO London , Buy, Rick , Chivers, Paul , Fiala, Markus , Frankova, Renata , Friend, Nigel , Gold, Joe , Gorte, David , Hagelmann, Bjorn , Harper, Richard , Herbelot, Olivier , Marsden, Andrew , Murphy, Ted , Nelson, Roderick , Ruane, Mark , Seyfried, Bryan , Shaw, Eric , Sherriff, John , Staley, Stuart , Steiner, Antony , Thuraisingham, Padmesh , Young, Steve X-cc: X-bcc: X-Folder: \RBUY (Non-Privileged)\Buy, Rick\Inbox X-Origin: Buy-R X-FileName: RBUY (Non-Privileged).pst Sovereign Bond Spreads: =20 Significant New Issuance - CSFB Commentary: ?=09The emerging debt markets rallied this week as the long expected new IM= F package for Argentina was finally announced on Tuesday. Argentina will re= ceive US$8bn in new loans from the IMF, of which US$5bn will be allocated n= ext month to reinforce reserves that were depleted as a result of massive s= avings withdrawal. Another US$3bn will be extended if Argentina obtains an = agreement to cut financing costs through a debt swap and possible buyback. = The rally in Argentina spilled over first to the higher yielding EM assets = (Brazil, Turkey etc), then helped other credits, although the impact was so= fter. However, the Argentine problem is far from solved, as the Republic's = government still has to deliver on its promises of a zero budget deficit an= d debt restructuring, therefore the medium term outlook is still cautious. = The Turkish market traded up after the Argentina package was announced; the= rally was also helped by the satisfactory T-Bills auction results and othe= r positive news from the country. For Russian assets, the IMF announcement = was also a long awaited boost: volumes increased significantly with prices = climbing by more than 2 points. The Russian US$ yield curve is getting very= steep because most of the supply that we see is concentrated in Russia 203= 0, while the buying interest is spread across the curve. Central and Easter= n European asset prices were on average ? point higher on the week with Pol= and underperforming other countries after the S&P changed its outlook on fo= reign currency rating for the Republic from "positive" to "stable". The EMB= I+ Index tightened by 50 bps in one session on Wednesday and closed 29 bps = tighter on the week. ?=09On Tuesday the FOMC cut the Fed Funds rate for the 7th time this year b= y 25 bps to 3.50%, the lowest since April 1994. The accompanying Fed statem= ent pointed at the slowing global growth and weakening business profits and= capital spending in the US, thus suggesting further easing is possible. ?=09As market conditions remain difficult and we are still in a traditional= August holiday period, primary market activity is very slow but expected t= o soar in September with a number of deals waiting in the pipeline.