EM debt heavy as stronger dollar takes a toll; Chile’s ENAP prices notes; Mexico weakens

By Rebecca Melvin

New York, Oct. 30 – Emerging markets debt was heavy on Tuesday as a stronger dollar took a toll on spreads, but overall volume was light as volatility continued to rock the broader markets, market sources said.

Mexico’s bond spreads were about 15 basis points to 20 bps wider and the peso was much weaker, spiking to more than 20 to the dollar on Monday from 19.36 on Friday, after president-elect Andres Manuel Lopez Obrador said he is cancelling a $13 billion airport project, fanning fears that the leader could veer away from policies that are business friendly.

Petroleos Mexicanos’ 6½% bonds due 2027 stood below 97 on Tuesday from above 98 on Friday.

There are also about $6 billion of airport bonds that took a bigger hit than the general Mexican bond market. The airport bonds sank about 1.5 points on Tuesday and stood at about 80 from 85 on Friday, a New York-based market source said.

In the primary market on Tuesday, Empresa Nacional del Petroleo came with deal for $680 million of 5¼% senior unsecured amortizing notes due 2029. The ENAP bonds priced at 99.915 to yield 5.261%, or U.S. Treasuries plus 215 bps, which was on top of guidance but tight compared initial talk at Treasuries plus 225 bps.

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