Primary hosts Central American Bottling, Jain Irrigation Systems price notes; Turkey ‘astonishingly solid’

By Christine Van Dusen

Atlanta, Jan. 26 – Guatemala’s Central American Bottling Corp. and India’s Jain Irrigation Systems Ltd. priced notes on a mostly firm Thursday that saw emerging markets investors focusing on rates.

“For EM credit, it’s all about rates and rate volatility,” a London-based analyst said. “Sentiment however remains firm, at least until higher rates also translate to a weakening in EM currencies.”

Turkey bonds managed to perform, even after the lira weakened and ahead of Fitch Ratings’ update.

“For tomorrow, we expect a generally benign reaction should Fitch decide to downgrade Turkey to BB+,” he said.

There could be an “initial kneejerk reaction as a result of panic-selling and potential forced selling by some local accounts due to increased risk-weights from holding Turkish non-lira denominated assets,” he said. “We, however, view any substantial widening as a buying opportunity.”

As evidence he pointed to the performance of bonds from Brazil and Bahrain after they were downgraded in 2015 and 2016.

But much will depend on market sentiment, he said.

“Over the last few days, performance of Turkish credit has been astonishingly solid, which gives hope that markets might overlook a potential downgrade,” he said. “A rating affirmation could even boost Turkish credit further in the near term.”

In deal-related news, Russia’s Rusal Capital DAC – part of United Co. Rusal plc – is planning to issue dollar-denominated notes due in five years, according to a company announcement.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.