Morning Commentary: Abu Dhabi mostly flat in active trade; Gabon steady after ratings downgrade

By Rebecca Melvin

New York, Oct. 16 – Abu Dhabi government bonds were active in the early session on Monday with spreads closing out mostly flat to wider by 1 basis point, according to a market source.

There was volume in Abu Dhabi 3 1/8% notes due 2027, which were seen 1.5 bps tighter and printing between 99.30 bid, 99.40 offered.

The long-dated Abu Dhabi 4 1/8% notes due 2047 last printed at 161, with a z-spread about 0.5 bp wider at plus 157 bps. Many had considered this bond cheap, according to a London-based trader.

Meanwhile, there was no notable selling of Gabon’s notes on the heels of a downgrade by Fitch Ratings to B from B+ with a negative outlook. In fact, the notes were seen tighter by about 3 bps, according to the trader.

The credit rating agency cited sharp deterioration of Gabon’s fiscal and external positions, an accumulation of large domestic and external arrears and a sharp rise in public debt, following the oil price shock starting in 2014.

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