EM remains in favor; Lat-Am spreads widen; roadshow for China Railway; Macedonia cancels deal

By Christine Van Dusen

Atlanta, July 15 – Sentiment for emerging markets assets remained mostly solid on Friday, even as Latin American credit moved wider and cash prices came under pressure from economic data and weaker U.S. Treasuries.

“Recent economic data has supported the current sentiment strongly in favor for EM,” a London-based analyst said, noting that inflows for the week ending July 13 were the second highest, year-to-date.

Brazil’s five-year credit default swaps spreads finished the session at 295 basis points from 293 bps, while Mexico’s moved to 144 bps from 138 bps, a New York-based trader said.

“Latin American high yield finishes mixed on the day, with Venezuela firmer, whereas Argentina is unchanged to slightly lower,” he said.

Venezuela’s 2027s closed at 49.25 from 48.50, PDVSA’s 2017s finished at 73.50 from 73.35 and Argentina’s Bonar 2024s closed at 116.70, mostly unchanged. Argentina’s 2026s were down a touch, he said, at 108.80 from 109.15.

“Flows on the lighter side, with better sellers of low-beta paper throughout the day,” he said.

China Railway Group Ltd. will set out on July 18 for a roadshow to market a possible issue of notes, according to a company filing.

Meanwhile, Macedonia is postponing a seven-year issue of euro-denominated notes after the legality of the transaction was challenged, a market source said.

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