Investors digest ECB news; oil prices take spotlight; Lat-Am fares well; Panama, Koc trade

By Christine Van Dusen

Atlanta, March 11 – Emerging markets investors were bracing for “high volatility” on Friday, following the European Central Bank’s Thursday announcement of additional stimulus, as oil prices once again took center stage.

“We expect a high volatility to persist in the bond market today as investors will be analyzing yesterday’s ECB move and Mario Draghi’s comments,” according to a report from Schildershoven Finance BV.

Now that the ECB news is out there, “oil prices might be in the spotlight once more,” a London-based strategist said. “While WTI and Brent crude had a remarkable rally since the lows in January and February, the stabilizing factor of oil production freezes is put into question.”

Several members of OPEC “initially hinted at meetings starting later in March, subsequent to the tentative agreement by Qatar, Russia, Saudi Arabia and Venezuela on Feb. 16,” he said. “Russia’s energy minister, however, stated on Wednesday that no time or date had been set so far. Moreover, a meeting between Latin American oil exporters scheduled to start today was postponed.”

Even with this uncertain global backdrop, Latin American assets saw their spreads move steadily tighter on Friday, with Brazil’s five-year credit default swaps closing at 385 basis points from 392 bps and Mexico’s moving to 162 bps from 171 bps.

“Cash prices finish mixed on the day, with some curves unchanged and others powering higher,” a New York-based trader said. “The trend seemed to be recent outperforming cash bonds underperformed today and laggards caught a bid.”

Bonds from Argentina closed higher, with the Bonar 2024s finishing at 108 from 107.75, he said.

Higher prices, lighter volumes

Venezuela’s 2027s moved to 41.40 from 40 and PDVSA’s 2017s closed at 54 from 52.75.

“Volumes on the lighter side today, with two-way inquiries from what we saw,” the New York trader said. “Market sentiment is leaning towards dovish central banks all around so that this quantitative easing trade can continue and risk assets can rally onward, regardless of any economic headwinds in the form of tepid global data.”

Panama sees activity

In other trading, the new issue of notes from Panama – 3 7/8% notes due 2028 that priced this week at 99.015 to yield 3.979%, or Treasuries plus 205 bps – moved to 99 bid, 99.20 offered on Friday.

Credit Suisse and Morgan Stanley were the bookrunners for the Securities and Exchange Commission-registered deal.

The proceeds will be used for general governmental purposes, including the refinancing of debt.

The final book was about $2 billion, with 85% of the orders went to the United States, 11% to Europe and 4% to Asia.

Later in the day the notes were seen trading at Treasuries plus 202 bps, a trader said.

Buenos Aires trades up

Buenos Aires’ new $1.25 billion in 9 1/8% amortizing notes due March 16, 2024 that priced this week at 98.741 to yield 9 3/8% traded up two points into the end of the week, a trader said.

The notes were talked at a yield in the mid-to-high-9% area.

The notes will have an average life of seven years and have three equal amortizations in 2022, 2023 and 2024.

Citigroup, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for funding social, infrastructure and other public investment projects, as well as for debt refinancing.

Koc ticks higher

And Turkey-based Koc Holding AS’ new 5¼% notes due 2023 traded on Friday at 99.40 bid, 99.80 offered after pricing this week at 99.135 to yield 5.4%, a trader said.

The notes were talked at a yield of 5½% to 5 5/8%.

BNP Paribas, Citigroup, HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

© 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.