Embraer does deal; Turkish election takes toll on bonds; Greece, Ukraine add to volatility

By Christine Van Dusen

Atlanta, June 8 – Brazil’s Embraer SA sold notes and bonds from Turkey suffered on a volatile but mostly quiet Monday morning for emerging markets assets.

Turkey’s notes took a hit after unofficial results from the country’s election showed that the AK party lost its majority for the first time in more than a decade.

“Market reaction will be negative in the short term, even though recently it had been pricing in a higher probability of a coalition,” according to a report from Barclays. “This raises the possibility of further underperformance in the [Turkish lira] and local rates.”

Against this backdrop, some industry experts are suggesting that investors show caution when it comes Turkey’s bonds.

“We recommend that investors who hold Turkish eurobonds take profits, and that others stay away from the market and observe how the situation develops,” according to a report from Schildershoven Finance BV.

Contributing to Monday morning’s volatility was the ongoing turmoil in Greece and news from Ukraine.

“A group of creditors has expressed disappointment that no basis had yet been found for detailed negotiations with Kiev on how to restructure its debt,” Schildershoven said. “Both sides accuse each other of a lack of engagement in talks.”

Also on Monday morning, volatility in U.S. Treasury rates continued, causing sovereign bonds from Asia to tread water until the start of the European session, a London-based trader said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.