Bank of China sells notes; Greece situation worries investors; eyes on Pacific Rubiales

By Christine Van Dusen

Atlanta, June 24 – Bank of China Ltd. sold notes on a Wednesday that started out relatively stable for most emerging markets, then turned sharply on the news that Greece had not reached a deal with its creditors, bringing the debt-saddled sovereign that much closer to bankruptcy.

“Feels a bit broken, at the moment,” a trader said.

Finance ministers from the euro zone reportedly walked out of a meeting with sovereign officials. Greece is required to pay the International Monetary Fund €1.6 billion this month or face default.

“The market shut down immediately,” a London-based trader said. “But I would say investment-grade cash [from Asia] closed 2 basis points to 4 bps wider on the headline.”

Investors were also eyeing Latin America-focused Pacific Rubiales, this time after Institutional Shareholder Services (ISS) recommended that its clients vote against the takeover bid from Mexico-based Alfa SAB de CV and Harbour Energy Ltd.

From Latin America, low-beta spreads widened on the day as most risk assets performed poorly in the wake of the latest news from Greece, a New York-based trader said.

Credit default swaps spreads for Brazil closed at 256 bps from 249 bps and Mexico’s finished at 129 bps from 126 bps.

Bonds from Venezuela were mostly unchanged to a touch higher, he said, amid good two-way flow but “not a whole lot of conviction in either direction.”

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