EM sees low liquidity; China plans renminbi notes; Turkish president’s remarks spur selling

By Christine Van Dusen

Atlanta, Dec. 2 – China announced plans for a three-tranche issue of renminbi bonds on a low-liquidity Friday that saw heavy selling for Turkey’s bonds after that country’s president advised investors to swap foreign exchange for the lira or gold.

Also impacting the picture on Friday was the news that the United States’ unemployment rate in November fell to its lowest level in almost a decade, which supported expectations of a rate hike this month.

“EM did have a brief window of outperformance in the morning, as cash prices held,” a London-based trader said.

But after Turkish President Tayyip Erdogan asked the central bank to reduce interest rates and urged Turks to make the exchange, the lira plunged and the selling floodgates opened, he said.

Local investors in bonds from Turkey searched for bids in the sovereign’s 2043s and 2045s after light buying earlier in the week, he said.

For its new deal, China is planning to issue a total of RMB 10 billion bonds due in three, five, 15 and 30 years, according to an announcement from the sovereign.

Bank of Communications is the bookrunner for the deal, which is expected to price on Dec. 8 and settle on Dec. 12.

Some investors were keeping an eye on Mexico-based Grupo Elektra SAB de CV after the company on Wednesday announced plans to redeem $275 million of its 7¼% senior notes due 2018 on Dec. 30.

© 2015 Prospect News.
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