EM debt spreads wider; oil exporting sovereigns weaker; Gazprom bid below par; CEZ prices

By Rebecca Melvin

New York, Nov. 15 – Spreads for emerging markets debt were wider on Thursday amid lighter trading flow in New York’s trading session as market players eyed an impending winter storm and the region’s first substantive snowfall of the season.

“Looking at the chatter, it’s quiet,” New York-based emerging markets fixed-income strategist Michael Roche said.

Overall, spreads were 2 to 3 basis points wider on the day for much of emerging-markets sovereign debt, with some oil-exporter credits taking bigger hits, Roche of Seaport Global Securities said.

Ecuador was a notable underperformer with its sovereign credit spread wider by 19 bps. Mexico, Argentina and Ukraine were each wider by 6 bps.

South Africa was wider by 2 bps and Asia’s sovereigns were “wider by twos and threes.”

Elsewhere, PJSC Gazprom’s 2.949% five-year notes, of which €1 billion notes priced at par on Tuesday, were bid just below par. The Moscow-based natural gas producer’s notes were quoted at 99.89.

But although the market is generally weak, the Czech Republic electricity company CEZ as was able to price €500 million of 2022 notes at a new issue premium of 10 bps. The CEZ 7/8% notes due 2022 at 99.93 to yield mid-swaps plus 70 bps, a London-based market source said.

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