EM suffers through ‘ugly session’; China Development gives guidance; Egypt, Ghana on deck

By Christine Van Dusen

Atlanta, Sept. 29 – Most emerging markets bonds remained weak on Tuesday, with Asian credits widening by as much as 15 basis points, even as the selloff in stocks slowed slightly.

Contributing to the tumult for emerging markets assets are bonds feeling the effects of losses for Volkswagen, Glencore and Agricultural Bank of China.

Qatar, for one, is suffering as a result of Glencore’s debt crisis and Volkswagen’s scandal, losing about $12 billion from the sovereign wealth fund.

And “Saudi Arabia has withdrawn an estimated $50 billion to $70 billion from global asset managers in order to fund its deficits and reduce exposure to volatility in equity markets,” a London-based trader said.

For Asian assets, sellers far outpaced buyers on Tuesday morning, with recent issues moving wider, another trader said.

In the afternoon, “market sentiment remained morbid,” another trader said. “Ugly session indeed.”

Against this backdrop, some issuers still managed to advance deals. China Development Bank set initial talk for a dollar-denominated issue of notes due in five years at Treasuries plus 110 bps to 120 bps, a market source said.

Ghana is expected to move forward this week with its $1.5 billion issue of amortizing bonds with an average maturity of 10 years, a deal that is partially guaranteed by the World Bank’s International Development Association.

And Egypt is looking to issue notes before the end of the year, a market source said.

© 2015 Prospect News.
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