Market ripe for issuance; CAF, Gulf Investment, Macedonia advance deals; Turkey, Brazil improve

By Christine Van Dusen

Atlanta, Oct. 26 – Many emerging markets assets tightened on Monday, following the previous week’s strong rally on dovish comments from the European Central Bank, though activity was not hectically busy.

The recent tone seems to set a good backdrop for new bonds, a trader said, and several issuers did advance deals. On that list were China’s Beijing Automotive Group Co. Ltd., Venezuela’s Corporacion Andina de Fomento (CAF), Kuwait’s Gulf Investment Corp., Macedonia and Dubai’s Majid al-Futtaim Holding LLC.

“Given where rates and spreads are, I would expect a meaningful pick up in new issues,” he said. “Looking forward it seems like the market is starting to price in some of the expected rates diversion between euro and dollar rates, which should also play out in credit.”

In trading on Monday, Asian bonds continued to move higher during the morning, with spreads tightening about 4 bps, a trader said, although he noted activity was thin.

Spreads for bonds from India were between 1 bp and 4 bps tighter, he said, and investment-grade financial names from Asia traded about 3 bps to 5 bps tighter.

Latin American bonds put in a fairly quiet session on Monday, though some names did see some action, with Brazil-based Petroleo Brasileiro SA moving higher again as clients and smaller funds added the notes, a New York-based trader said.

“Not seeing any sellers of Petrobras, a few sellers in [Vale SA], but inquiry is even,” he said.

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