Morning Commentary: Weaker tone across MEA region; Bahrain, Oman spreads wider; Egypt, Africa weak

By Rebecca Melvin

New York, March 2 – Emerging markets were weaker on Friday, with spreads wider almost across the board in the Middle East and Africa region, as rates wavered but popped higher as the European session was closing.

“A weaker macro picture plus a [dollar] chart that just may be has double bottomed for the near term are weighing on the market,” a London-based trader said.

In the Middle East, Bahrain’s bonds were wider with the Bahrain 2047 notes quoted at about 94¼ at the mid-point, and with spreads about 10 basis points wider on the week. Fitch Ratings downgraded the sovereign's foreign-currency issuer rating to BB- from BB+ on Thursday, citing lack of a clear strategy in the medium term to tackle high deficits.

Efforts to raise revenue and trim spending, including its late 2017 excise taxes and fuel price increases in January 2018, have not yet helped Bahrain debt/GDP, which increased to 81.5% in 2017 from 73.3% in 2016, according to Fitch, which projects government debt/GDP will rise above 100% in the medium-term.

Oman was also sharply lower, with spreads wider by 10 bps to 13 bps, the London-based trader said.

© 2015 Prospect News.
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