Oil prices, Brazil holiday, snow in New York keep EM quiet; most names dip; ADB plans deal

By Christine Van Dusen

Atlanta, Jan. 25 – The recent rally of emerging markets assets paused on a quiet Monday – due to the holiday in Brazil and the snow in New York – after oil prices, which climbed late last week, moved lower again.

Oil prices were down about 3% on the news that Saudi Arabia was maintaining investment in energy projects, according to a report from Barclays Capital.

“That ‘get me in’ mentality we saw in the market Thursday afternoon and Friday has been replaced by a refocus on the usual oil, China and liquidity questions,” a trader said Monday morning. “Momentum is lost, and so is the desire to add risk for now.”

Against this backdrop, Ivory Coast-based African Development Bank announced plans for a benchmark-sized issue of sterling-denominated notes due in December of 2018.

Barclays Capital, Citigroup and RBS are the bookrunners for the deal.

And Nigeria is planning to a host a non-deal roadshow and could later issue about $1 billion of bonds, a market source said.

Other details were not immediately available on Monday.

In trading, bonds from Peru tried to keep the gains made last week, a trader said.

“The market is trying to hold levels from Friday,” he said.

Most names from Latin America moved lower, a New York-based trader said.

“During the morning and early afternoon, prices were stable,” he said. “We saw a material weakening of the market in the afternoon, when most of the damage was done.”

Petrobras’ bids take a hit

Bonds from Brazil-based Petroleo Brasileiro SA (Petrobras) were mostly unchanged until the late afternoon, he said, when screen bids were hit. That sent the curve down between ½ point and one point.

“Brazil cash started the day strong, though it could not be sustained and closed a ¼ point to ½ point lower across the curve,” he said.

Venezuela, PDVSA move lower

Notes from Venezuela and PDVSA moved about 1½ points lower “on little news, other than the 7% move lower in oil,” he said.

Flows for corporate bonds were light on Monday, and most energy-related names remained well-offered, he said.

Romania’s rating affirmed

Investors were also keeping an eye on Romania after Fitch Ratings affirmed the sovereign’s rating at BBB- with a stable outlook.

“Romania’s rating is supported by its healthier economic outlook, presently better fiscal position, as well as more favorable governance indicators than at BBB-ranged peers,” according to a report from Schildershoven Finance BV. “Romania’s public finances are relatively strong.”

The rating affirmation should have “a limited impact on sovereign eurobonds,” the report said.

© 2015 Prospect News.
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