* Contagion from Greece affecting emering corp debt issuance
* Three emerging corp bonds pulled last week
* Borrowers likely to wait for pricing to improve
By Carolyn Cohn
LONDON, Feb 10 (Reuters) - Worries about debt-laden Greece
are spilling over into high-yielding emerging corporate debt
markets, and borrowers are likely to wait for more clarity on
sovereign risk before issuing, analysts say.
Investors have money waiting to be put to work in emerging
debt markets due to signs of recovery in the global economy and
a clampdown on interest rates in developed countries.
But with the recovery to some extent easing the pressure on
immediate borrowing needs, corporates are likely to wait, rather
than issuing now into falling markets.
At least three emerging market corporate borrowers have
postponed bond issues in the past week, unnerved by increasingly
choppy market conditions.
New World Resources (NWR) <NWSPsp.PR> <NWRS.L>, owner of the
Czech Republic's largest hard coal mines, pulled a 700 million
euro-equivalent issue on Wednesday, citing "negative market
volatility".
State-run Bank of India <BOI.BO> postponed a planned dollar
bond this week because of market conditions after a week-long
roadshow while last week another state-run Indian lender, Bank
of Baroda <BOB.BO>, postponed its planned bond, also citing
choppy conditions.
Investors are waiting to see if other euro zone members will
come to the rescue of heavily indebted Greece [],
and the uncertainty has hit high-yielding emerging market debt.
"Spreads have widened and issuers are waiting for a
resolution of the Greek situation. There are plenty of deals on
hold," said Dmitry Sentchoukov, emerging markets strategist at
Commerzbank.
"If there is a healthy resolution, nearly every issuer will
be able to issue debt at better terms than right now."
RISING BORROWING
A spurt of optimism and traditional January funding needs
brought many emerging market issuers to market last month, with
more expected to follow, particularly from the higher-risk,
corporate end of the spectrum.
Emerging market sovereigns have raised about $16 billion
this year, around a quarter of their $66.5 billion 2010 funding
needs, JPMorgan said in a note issued last week.
Emerging quasi-sovereigns and corporates have raised $12.2
billion year-to-date, the bank said.
Analysts have forecast that more than $100 billion in
emerging corporate and quasi-sovereign debt will be issued this
year.
Some emerging corporate deals have been well received, with
Russian oil producer TNK-BP's <TNBPI.RTS> $1 billion issue nine
times oversubscribed.
But worries about sovereign risk in Greece and other euro
zone peripheral countries and the impact on sovereign and
quasi-sovereign borrowers have lifted borrowing costs.
Emerging sovereign debt spreads have widened 50 basis points
after hitting their narrowest in 18 months in mid-January and
are trading at 313 bps over U.S. Treasuries <11EMJ>.
Other emerging market borrowers waiting in the wings include
Bahrain's United Gulf Bank and Saudi property developer Dar
al-arkan, who are hoping to raise $500-750 million each.
Russian corporate borrowers are also hoping to come to
market, with several quasi-sovereigns waiting for the launch of
a jumbo sovereign bond, expected by April, before issuing.
Borrowers are more inclined to hold fire than to pay up, but
are still likely to come to the market later in the year if
conditions improve, bankers and analysts said.
"(NRW) weren't willing to pay any interest rate...and I
think they looked at it as 'today is not the ideal time to be in
the market'," said a banker involved with the NRW deal.
"I don't think they'll come back for at least a couple of
months."
Analysts also point out that Greek fears may be overdone,
with the debt-to-GDP burden in Greece higher than that of its
emerging European neighbours.
"This is just the normal give-and-take of market conditions,
I do not think it is going to last long," said Richard Segal,
analyst at Knight Libertas.
"A lot of people are worried about contagion from Greece but
they don't know what they are talking about."
(For "ANALYSIS-Greece contagion for CEE seen only for short
term", see [])
(For "ANALYSIS-Emerging corporates eye capital market
window", see [])
(Additional reporting by Simon Jessop, Editing by Sitaraman
Shankar and David Cowell)
