Oil prices, Ukraine news push EM bonds wider; liquidity stays thin; Philippines rallies

By Christine Van Dusen

Atlanta, Dec. 11 – Emerging markets bonds were relatively quiet on Thursday morning as plummeting oil prices and news from Ukraine pushed most credit default swaps spreads wider.

Russian credit default swaps spreads widened by about 4 basis points on Thursday morning, a London analyst said.

“Cash spreads are a little wider on the Treasury move, with 10-year yields falling to 2.15%,” he said.

But buyers of corporate paper from Russia were coming in slowly, he said.

Also from Russia, investors were watching OAO Rosneft, which will start issuing about RUB 625 billion of bonds, he said.

Looking to Turkey, bank bonds were lower but sovereign credit default swaps spreads were 3 bps tighter, the analyst said.

From Asia, credits followed the global risk-off tone and opened between 3 bps and 5 bps wider, a London-based trader said.

“Liquidity was very thin, with dealers refraining to take down risk,” he said. “We are closing at the wides.”

Oil-related companies finished Asia’s Thursday session up to 5 bps wider, while technology companies widened by about 3 bps.

“Korea is holding in better with onshore buyers in the long end,” another London trader said. “It closed 3 bps to 5 bps wider.”

“The focus was in the high-yield sovereigns, with Philippines upgraded to Baa2 by Moody’s,” he said. “That had local banks buying, which drove the curve up a ½ point higher.”

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