Fed chair’s comments create volatility; Lat-Am spreads tighten; Sharjah markets sukuk

By Christine Van Dusen

Atlanta, Aug. 26 – Emerging markets assets were volatile on Friday as investors digested Federal Reserve Chair Janet Yellen’s optimistic comments from Wyoming, in which she indicated that interest rates could rise later this year.

“Jackson Hole delivers a much-anticipated jolt to a largely complacent market,” a New York-based trader said.

Oil remained on radar screens, though as prices held their gains on Friday morning there was “little actual market impact on [emerging markets] credit,” a London-based analyst said.

Credit default swaps spreads for Latin American bonds closed tighter on Friday, but “this was seen prior to the equity and rates selloff,” a New York-based trader said.

Trading on Friday was light for Middle Eastern notes, as is typical during the summer lull, with some paper around from locals and semi-professionals, a London-based trader said.

Perpetuals seem to have “run out of steam, somewhat,” he said.

Investors are looking ahead to the possible issue of notes from Saudi Arabia, he said.

“A very well-telegraphed deal that I still expect to be surely between $10 billion and $12 billion,” he said. “I’m sure there will some adjusting on peer credits – Saudi Electricity Co. [SECO] and Qatar – as we get closer to pricing.”

Sharjah Islamic Bank is on a roadshow to market a dollar-denominated and benchmark-sized issue of Islamic bonds, a market source said.

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