EM quiet, weaker heading into holiday weekend; Venezuela little changed; Argentina slips

By Rebecca Melvin

New York, Oct. 6 – Trading slowed in emerging markets on Friday and was a touch weaker amid some profit taking heading into the long holiday weekend in the United States and after U.S. Treasury yields pushed up following a weaker-than-expected read on the U.S. labor market for September.

U.S. financial markets will be closed on Monday in observance of Columbus Day.

On Friday, the U.S. Labor Department reported that non-farm payrolls for September lost 33,000 jobs, taking a hit for the first time in seven years and below the gain that was expected, albeit a smaller gain in anticipation of the economic hits resulting from devastation of Houston and certain coastal areas meted out by Hurricanes Harvey and Irma.

The rate of unemployment dropped to 4.2% from 4.4%, which is below the 4.6% rate that the Federal Reserve deems normal for the long term. The Labor Department had warned before the data release that hurricanes may have hurt economic activity.

In Latin America, Venezuela bonds traded with investors eyeing the 2017 Venezuela sovereign notes that mature next month.

The Venezuela 2027 was 93¼ bid on Friday, which was slightly lower. But most investors expect the bond will be repaid at maturity despite the cash crunch of President Nicolas Maduro’s troubled regime.

“We think [the bonds] are going to be paid and they should continue to move to par. After October, the bonds should be trading at 95,” a New York-based trader said.

Meanwhile, Argentina sovereign debt was weaker on the heels of a significant run up on the week and amid profit taking heading into the holiday weekend.

While the whole curve was somewhat weaker, the Argentina 2117 notes were notably so as were the Argentina 2026 and 2027 notes, or the belly of the curve, a trader said.

The primary market was quiet on Friday after a busy week that has seen a lot of paper pricing in the Middle East region.

Following on the heels of Saudi Arabia’s $12.5 billion triple tranche deal last week, Abu Dhabi priced $10 billion of notes in three tranches late Tuesday. Those bonds were little changed on just slightly tighter spreads on Thursday. Also Turkiye Is Bankasi AS (Isbank) priced a $500 million add-on to its 6 1/8% notes due 2024. The new notes, which priced at 102.017 to yield 5¾%, brought that deal size up to $1.25 billion.

© 2015 Prospect News.
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