EM remains volatile; Lat-Am starts firm, then widens after Yellen; Egypt, Ghana prep deals

By Christine Van Dusen

Atlanta, Feb. 10 – Many emerging markets bonds were firmer at the open on Wednesday, but spreads widened, volumes were subdued and conditions remained volatile after Federal Reserve Chair Janet Yellen testified before the House Financial Services Committee.

Also on Wednesday, investors kept an eye on oil prices “amid further signs of a global rut,” a trader said.

At the open, emerging markets paper was experiencing a small bounce, another trader said, and selling was tame.

“So maybe today we see the spread to corporates close the gap we have seen open up over the last few sessions,” he said.

Brazil-based Petroleo Brasileiro SA, Vale SA and Mexico’s Cemex SAB de CV firmed up in the morning, but “we are still trading very sloppily,” a New York-based trader said. “Volatility will remain firmly entrenched in our universe.”

Said another trader, “Market liquidity has made sitting on your hands a national pastime for EM investors,” a trader said.

At the close, Latin American sovereign spreads were wider, with cash prices slumping, a New York-based trader said.

In deal-related news, one trader was taking a closer look at Egypt’s plans for issuing notes by the end of the year.

In other news from Africa, the proceeds from Ghana’s upcoming debt sale, which could happen as soon as June, will be used for refinancing debt, a strategist said.

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