Morning Commentary: ‘Yes’ vote prevails in Turkey referendum; Petroleos de Venezuela’s bonds quiet

By Colin Hanner

Chicago, April 17 – With some markets still closed in observance of the Easter holiday, activity was sparse in comparison. Turkey grappled with the weight of a key referendum vote that took place on Sunday.

With a recount effort already making way, a constitutional referendum was passed on Sunday that will give broader authority to Turkey president Recep Tayyip Erdogan.

Those in favor of the referendum made up over 51% of the votes, while the remainder voted against the measures, citing an abuse of power that would cease the parliamentary system currently in place.

Last week, a market source said sovereign cash trading was 10 basis points wider on the week, mirroring other similar emerging market countries. On Monday, the lira and bonds were up on the vote, which is, at the very least, providing short-term stability in the country.

PDVSA quiets

Just two sessions following the payment of interest and principal of $2.2 billion to investors, Petroleos de Venezuela SA’s bonds have ticked higher across the board, a market source said, though seemed to be taking a breather on Monday morning.

PDVSA’s 8½% notes due 2017 were up 1 point to an 89½ bid, 90½ offer.

The 9% notes due 2021 were unchanged with a 54 bid, 55 offer, as were the 6% notes due 2024, which were quoted with a 39¼ bid, 40¼ offer.

Venezuela’s bonds were also flat.

The 7% notes due 2018 were unchanged at 70 bid, 71 offer.

Its 6% notes due 2020 were quoted at 52 bid, 53 offer.

And the 8¼% notes due 2024 were unchanged with a 46¼ bid, 47¼ offer.

U.S. Treasuries gain

A market source said that gains from emerging markets last week were due to gains in U.S. Treasuries which pushed the yield curve lower, a trend which continued on Monday.

The five-year yield was at 1.75%, 2 bps tighter than Thursday and 13 bps lower than last Monday.

The 10-year yield was at 2.23% on Monday, 1 bp lower from Thursday and 12 bps lower than last Monday.

And the 30-year yield was at 2.90%, 1 bp lower from Thursday and 8 bps lower than last Monday.

© 2015 Prospect News.
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