Oil prices, U.S. rates hurt EM performance; Equate struggles; Saudi Arabia sees action

By Christine Van Dusen

Atlanta, Oct. 28 – Oil producers met for technical meetings on a softer Friday for emerging markets assets as U.S. rates undermined performance and the new deal from Kuwait’s Equate Petrochemical Co. KSCC struggled somewhat in trading.

“The participants have noted that oil prices pared some of the gains after the surprise agreement in end-September,” a London-based analyst said.

Meanwhile, the new issue of notes from Kuwait’s Equate Petrochemical – $2.25 billion senior notes in two tranches – grappled with a market already flooded with paper from Saudi Arabia’s mega-deal.

Much of the performance during the week for emerging markets was hurt by a jump in U.S. rates, a trader said.

“While spreads tightened across the board, the 10-years climbed by another 10 bps over the week, supported by solid macro data and an increasing conviction for a Fed rate hike in December,” he said. “Mozambique was the clear underperformer.”

On Tuesday the sovereign announced that it was in debt distress and will be looking to restructure its debt.

In response to this latest news, the sovereign’s bonds have dropped almost 25 points, the analyst said.

The aforementioned deal from Saudi Arabia saw some activity in trading on Friday, a trader said, as investors “continued to digest” the $17.5 billion deal.

In other news, South Africa’s Cell C (Pty) Ltd. has shelved plans for a $600 million issue of notes due in 2021, a market source said.

© 2015 Prospect News.
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