Sid Banka sells notes; Brazil outlook cut creates volatility; risk appetite begins to recover

By Christine Van Dusen

Atlanta, July 28 – Slovenia’s Slovene Export and Development Bank (Sid Banka) sold notes on a choppy Tuesday that saw U.S. Treasury yields rally and risk appetite slowly improve ahead of a two-day Federal Reserve meeting.

Notes from Asia closed the day mostly unchanged amid a slightly better tone, a London-based trader said.

Selling pressure lessened, he said, and recent issues saw “decent squeezing.”

China Minmetals Corp.’s new 3½% five-year notes traded at 251 bps on Tuesday, and its 4¾% notes due 2025 moved to 205 bps bid, 200 bps offered.

The curve for oil-related companies from China was quiet, but about 2 bps wider, he said.

“Korea was mixed,” he said.

India’s Adani Ports and Special Economic Zone Ltd.’s recent issue of 3½% notes due 2020 traded at 205 bps on Tuesday before moving to 200 bps.

Bonds from Brazil started off on weak footing on Tuesday after Standard & Poor’s lowered its outlook for the country’s foreign-currency debt.

The rating agency revised its outlook to negative from stable and affirmed the country’s ratings. It said there is increased possibility of downside for the country because of execution risk in the policy changes under way.

The picture for the country’s bond prices improved at midday, a New York-based trader said. The sovereign’s 2025s and 2045s were outperformers while some dollar-denominated bonds on the long end were under pressure.

Five-year credit default swaps spreads for Brazil closed Tuesday at 292 bps from 300 bps, while Mexico’s finished the day at 137 bps from 143.50 bps.

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