Morning Commentary: EM credit struggles; Turkey underperforms; Argentina century bond near lows

By Rebecca Melvin

New York, May 8 – Emerging markets debt continued to struggle on Tuesday with paper for sale for Africa, exchange-traded funds and Turkey, which was an underperformer of the session.

Turkey’s sovereign bonds were called 5 basis points to 10 bps wider on the day, and Turkey corporate issues were 15 bps to 20 bps wider, a London-based trader said.

With the exception of a small deal announced by KEFI Minerals plc for a placement of $160 million of listed infrastructure bonds for gold-mining operations in Ethiopia, there were no new announcements for deals for the Middle East & Africa region.

“The market doesn’t seem that receptive at the moment,” the trader said, casting doubt on speculation that a healthy pipeline of deals will try to price before the start of the month-long Muslim Ramadan holiday next week.

But the Republic of Ghana is on the calendar and expected to price after it concludes roadshow meetings on Wednesday. “They will likely be cheap, and come with a good concession,” a trader said regarding new paper from Ghana.

Argentina’s $2.75 billion 7 1/8% notes due 2117 were a little lower on the day but have recovered some ground since hitting a low point on Friday. The 2117 century bond traded last at 85.86 on the Berlin exchange, up from below 84 early in the session and up from 83.5 on Friday, which was their lowest price since being issued at a reoffered 90 just short of a year ago in June 2017.

The Argentina Province of Cordoba’s 7 1/8% notes due 2027 were trading last around 93.25, which was down about 0.4% from 93.62 on Monday. That paper is also at its lows since pricing $450 million of the notes on the heels of the sovereign’s successful century bond in June 2017.

Before the downdraft last Thursday and Friday, the Cordoba 2027s were trading north of 96.

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