Morning Commentary: EM bonds weaker ahead of FOMC update; Eskom holds for Thursday

By Rebecca Melvin

New York, Aug. 1 – Emerging markets bonds were weaker on Wednesday ahead of news from the U.S. Federal Reserve on monetary policy and softer currencies, and the proposed dollar bond from South Africa’s Eskom Holdings SOC Ltd. was not forthcoming.

The Eskom bond isn’t pricing until Thursday, a London-based syndicate source said.

The Johannesburg-based state-run utility is planning a government-guaranteed tranche and a non-guaranteed tranche.

Emerging markets secondary trading was weaker with some currencies under pressure, including the Turkish lira, which crept higher to 4.93 to the U.S. dollar from 4.91 on Wednesday.

Investors are watching for the conclusion of a two-day meeting of the Federal Open Market Committee. The Fed is largely expected to leave interest rates unchanged with two more rate increases expected to come in the remainder of the year.

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