Oil prices put pressure on EM; ‘minimal progress’ on Ukraine peace deal; Slovakia sells notes

By Christine Van Dusen

Atlanta, Jan. 13 – As oil prices on Tuesday fell to a 5½-year low before ticking back up a touch, many emerging markets bonds weakened, including those from Brazil-based Odebrecht SA.

Brazil-based Petroleo Brasileiro saw its bonds move 5 basis points wider while steel firm Companhia Siderurgica Nacional received little support, with its 2020s moving down another point to 90¾, a New York-based trader said.

Looking to Russia, bonds opened weaker, with the 2030s down 1 point, a London-based analyst said.

“Yesterday saw minimal progress toward a more concrete peace deal in Ukraine,” he said, noting that local media reported the rebels in the country could end the already weak truce. “Talks between the foreign ministers of Russia, Ukraine, France and Germany ended inconclusively.”

So the situation remains tense, he said, which hurt sentiment and dinged bonds from names like Kazakhstan, which saw its bonds move 25 bps wider on Tuesday.

“Elsewhere, however, we are seeing good demand in our markets, especially Central and emerging Europe,” he said. “But the Treasury move means we are generally wider in spread terms.”

Against this backdrop, Slovakia printed a €1.5 billion issue of notes due in 2027 at a yield of 1.442%, or mid-swaps plus 56 bps, a market source said.

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