Morning Commentary: EM spreads mixed; Kazakhstan notes on tap; Bolsonaro wins in Brazil

By Rebecca Melvin

New York, Oct. 29 – Spreads on emerging markets debt were largely mixed on Monday after widening out on Friday. There was mostly a subdued tone with no new deals announced in the primary market in the Central and Eastern Europe, Middle East and Africa region, market sources said.

Roadshow meetings for the Republic of Kazakhstan’s euro-denominated senior unsecured benchmark offering of 10-year notes began in Europe, with investor response to the planned deal expected to be positive.

“I think it should go pretty well.... the market has been waiting for this one for a while so investors should be ready to engage. It will all come down to pricing and if the issuer is OK to pay a higher new issue premium,” a London-based market source said.

The Kazakhstan Rule 144A and Regulation S deal will be issued subject to market conditions with a dual listing on the London Stock Exchange and Astana International Exchange.

Elsewhere, some investors of Brazil’s bonds turned sellers in initial reaction to news that far-right candidate Jair Bolsonaro, 63, defeated leftist ex-Sao Paulo mayor Fernando Haddad by 55.54% to 44.46% in Brazil’s presidential election on Sunday.

Polls predicted the Bolsonaro victory and financial markets players favored the candidate, who campaigned on market reforms and privatization, as well as environmentalism. Bolsonaro officially takes office in January.

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