EM spreads tighten on U.S. data; UAE's Gems outperforms; Aldar ticks up, Lebanon mixed

By Christine Van Dusen

Atlanta, Jan. 2 - Emerging markets bonds entered the new year with limited activity but better spreads as Treasury prices moved higher Thursday on better-than-expected - though still somewhat weak - manufacturing data from the United States.

"There are a few prices around, but I expect it will be Monday, at least, before things really open up for 2014," a London-based trader said. "Generally, spreads have done well over the month, with the 10-year Treasury now 3.025%."

Among bonds from the Middle East, the recent issue of 12% perpetual notes from the United Arab Emirates' Global Education Management Systems Ltd. (Gems) has been a solid performer during the last month, he said.

The bonds - a Regulation S deal led by Abu Dhabi Islamic Bank, Credit Suisse and Morgan Stanley - have tightened about 100 bps, he said.

"It was a small deal, I might add," he said.

The notes closed Thursday at 106¾ bid, 107¾ offered.

Other perpetual bonds from the Middle East saw limited interest from investors on Thursday, with Emirates Islamic Bank's still trading with a low- to mid-91 handle, he said.

The bank's perpetuals closed Thursday at 90.87 bid, 91.62 offered.

Abu Dhabi Islamic Bank's perpetual notes, which priced at par, closed Thursday at 99¾ bid, 100¾ offered, a trader said.

"Majid Al Futtaim Holding has support now at 101.62 on the bid side," he said.

In other trading from the Middle East, Abu Dhabi Commercial Bank's (TAQA) 2023s were spotted at 93.10.

"This has had a good spread run since early November, moving from 205 bps to 165 bps over," he said.

TAQA's 2017s were trading on Thursday at 99.95 bid, 100.15, he said.

Some Qatar bonds outperform

Qatar National Bank saw its 2016s trade at 100¼ bid, 100½ offered.

Meanwhile, long-dated bonds from Qatar were holding in well on Thursday, he said, with the 2040s and 2042s between 15 bps and 20 bps better over the month.

"They're outperforming rates," he said. "The first quarter tends to favor bonds out to 2020, wtih a little spread buffer."

So some bonds from Dubai, Bahrain and Kuwait should see support, he said.

"Less so for Abu Dhabi and Qatar," he said.

Middle East in focus

In other trading on Thursday, Lebanon's 4¾% notes due in 2016 that priced at 99.98 traded at 99 bid, par offered, a trader said.

The sovereign's 6.1% notes due 2022, which came to the market at 99.195, moved to 97¼ bid, 98¼ offered on Thursday.

And United Arab Emirates-based Aldar Properties PJSC saw its 4.348% notes due 2018 trade at 100.62 bid, 101.62 offered on Thursday.

The notes priced at par.

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