Kuveyt Turk advances deal; weaker, illiquid session for EM; Colombia, Mexico fare better

By Christine Van Dusen

Atlanta, Feb. 8 – Emerging markets put in a weaker, lower and illiquid session on Monday as oil dipped and investors showed caution after the previous week’s weaker-than-expected payrolls numbers from the United States.

With this latest decline in oil prices, emerging markets assets are “more resilient,” a trader said. “So although they’re wider, I have not seen the continuous waves of sellers looking to exit, as we saw in January.”

Given the market’s current volatility, “I expect most of the risk-on trading to be channeled via primary issuance,” he said. “The big question still to be answered is: are they ready to issue?”

Latin American bonds were weaker, though some names were holding in, a New York-based trader said.

“Although we are seeing better selling, it is light and sporadic,” he said. “The majority of the corporate space is weaker.”

Banks from Colombia and Mexico didn’t trade too poorly, he said, but volumes for Brazil-based Petroleo Brasileiro SA were “unusually low.”

In deal-related news, Turkey’s Kuveyt Turk Katilim Bankasi AS set initial talk in the 8% area for a dollar-denominated issue of Islamic bonds due in 10 years, a market source said.

A strategist said he expected the size to be between $250 million and $400 million, and that a yield in the low-8% area was “fair.”

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