Spreads widen on Chinese data, Saudi turmoil, then tighten; Brazil strengthens; roadshows set

By Christine Van Dusen

Atlanta, Jan. 5 – Many emerging markets bonds at first moved wider on Tuesday – with investors remaining concerned about China’s economy and tensions in the Middle East – then tightened somewhat into the end of the session.

“A pretty tough start to the year, with credit wider and equities posting decent losses across the board as fears of a Chinese hard landing hit the market again,” a trader said. “Flows were mostly positive, with the Street market bonds and credit default swaps wider with the macro weakness.”

The execution of a prominent Shia cleric in Saudi Arabia, as well as the burning of the Saudi embassy in Tehran, also took their toll on investor sentiment, another trader said.

Against this backdrop, several issuers were on or were planning roadshows, including China’s Jiangsu NewHeadLine Development Group Co. Ltd., China’s Swire Properties Ltd. and China Energy Reserve and Chemicals Group Co. Ltd.

Looking to Latin America, notes from Brazil managed to open strongly on Tuesday, a New York-based trader said.

“The belly of the curve is on fire,” he said. “Not surprisingly, this segment took the brunt of the pain yesterday and, in general, the last couple of weeks underperformed.”

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