Emerging market debt up slightly in thin trading

By Reshmi Basu

New York, Dec. 21 - Emerging market debt saw a dull trading day Thursday while the Philly Fed reported slower than expected manufacturing data.

Market sources described the session as uneventful as liquidity has pretty much dried up for the remainder of the year. At this point, most market participants have closed out their books, securing around a 10.7% gain on the JP Morgan EMBI index - at least assuming they matched the benchmark's performance.

Meanwhile U.S stocks slipped after the Philadelphia Federal Reserve's December business index suggested soft regional manufacturing activity, which created worries about growth prospects in the United States.

"It allowed a small mark-up in [EM] prices off the advances in U.S. Treasuries," noted Enrique Alvarez, Latin America debt strategist for IDEAglobal.

At session's close, the yield on the 10-year Treasury note stood at 4.55% from Thursday's close of 4.59%.

Nonetheless, the Philly Fed numbers had a minimal impact on Latin America, with so many market participants out, noted a trader.

"Overall, there wasn't a lot of large movements in the market. It's very range-bound, but a tad firmer on Treasuries," he added.

In trading, the bellwether Brazilian bond due 2040 inched up 0.05 to 133.15 bid, 133.25 offered.

The thin volumes are causing very wide bid, offer spreads, noted Alvarez, who added that the market is not overly volatile.

"It's trended upwards over the last few days," he said.

Uruguay rises on upgrade

In other news, Uruguayan bonds gained on news that Moody's Investors Service upgraded the country's bonds to B1 from B3 on its fiscal performance.

During the session, the country's bonds due 2036 gained 0.50 to 110 bid, 111 offered.

Meanwhile the Argentinean central bank reported that the country's economy will grow 7.4% next year, compared with the government's forecast of 4%.

The growth story has bolstered the country's debt this year, making it one of the market's best performers.

During the session, the Argentine discount bond due 2033 climbed one point to 109 bid, 109.50 offered.

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