Tensions put Turkey under pressure; arrests send Brazil bonds wider; Macedonia sells bonds

By Christine Van Dusen

Atlanta, Nov. 25 – Turkey was in focus on Wednesday after the sovereign shot down a Russian warplane, a sign of escalating tensions between the two countries and in the Middle East.

“We open up unchanged after yesterday’s widening as geopolitics reared their head again,” a trader said on Wednesday. “We saw some panic-selling in the Street and from retail, but we closed off the wides as the Street turned and bought risk and real-money came in to buy bonds on the weakness.”

Said an analyst, “We will watch the steps the Russian government may take against Turkey. Expect Turkey’s bonds will remain under pressure in coming days.”

Wednesday’s session also benefitted from the bounce in oil, which kept “risk from falling off a cliff,” another trader said.

But overall, activity was limited ahead of Thursday’s Thanksgiving holiday in the United States.

Looking to Latin America, bonds from Brazil widened on the news that police arrested two political leaders amid allegations they had obstructed a corruption investigation related to Petroleo Brasileiro SA, a trader said.

“We are opening to a much weaker real due to two high-profile arrests last night,” he said. “Brazilian spreads are clearly going to be wider today.”

In primary-market news, Macedonia priced a €270 million issue of 4 7/8% notes due in 2020 at 98.921 to yield 5 1/8%, a market source said.

And Pakistan could issue up to $1 billion of Islamic bonds, a market source said.

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