Greek talks boost some EM, most still weaker; Brazil underperforms; Ukraine deadline looms

By Christine Van Dusen

Atlanta, Aug. 10 – Some emerging markets bonds managed to tick up a touch on Monday morning on the news that Greece’s debt talks were progressing, but most names remained weak as oil prices continued their downward trajectory.

Brazil was among Monday morning’s biggest underperformers, a London-based trader said.

“Investors now view a downgrade as the base-case scenario,” he said. “Can’t say we have seen any noticeable flow of that cash being invested elsewhere.”

Bonds from Africa were “very weak,” he said, “with spreads approaching March wides.”

Looking to Asia, investment-grade cash bonds opened Monday’s session with a defensive tone after weaker trade data from China, another trader said.

“However, the market took it as a positive sign for further stimulus,” he said. “Investment-grade cash closed broadly unchanged.”

Oil companies from China held firm, even amid lower oil prices, and 10-year paper from Korea continued to look heavy.

“India is firm, with ongoing demand in the short-end financials,” he said.

Meanwhile, market sources were whispering about a possible local-currency issue of five- and 10-year notes from Saudi Arabia and new bonds from Brazil-based auto wheel-maker Iochpe Maxion.

In other news, Ukraine officials are planning to meet with a committee of creditors on Wednesday in San Francisco in an effort to reach full agreement on the country’s debt, according to a press release from the country’s finance ministry.

© 2015 Prospect News.
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