EM puts in mixed performance; Trinidad and Tobago, Adani bring dollar deals; Dubai banks eyed

By Christine Van Dusen

Atlanta, July 28 – Trinidad and Tobago and India’s Adani Transmission Ltd. advanced deals on a mixed Thursday for many emerging markets assets, including those from Latin America, which saw spreads widen while cash prices showed more variety.

“Following the FOMC meeting yesterday, we have seen a flattening of the U.S. Treasury curve as the 10-year edged lower towards the 1½% threshold,” a London-based analyst said. “Investors are looking for clearer indications on whether and when to raise, despite the Fed’s upgrade in the assessment of the U.S. economy and the mentioning that ‘near-term risks to the economic outlook have diminished.’”

He expects the next rate hike will come either at the meetings on Dec. 13 and 14 or later in the first quarter of 2017.

Looking to Latin America, it was a “mixed bag” for the markets on Thursday, with spreads wider and “cash prices mixed, depending on the maturity and credit,” a New York-based trader said.

Brazil’s five-year credit default swaps spreads closed at 296 basis points from 293 bps, while Mexico’s moved to 154 bps from 151 bps.

For Brazil, “cash prices did make up a lot of ground in the final hour of trading,” he said.

Cash prices finish mixed, with some curves unchanged and some lower, he said.

“Colombia cash continues to feel heavy but did bounce a bit later in the day,” he said. “Lat-Am high yield finishes mostly firmer on the session.”

PDVSA’s 2017s closed at 78 from 76.25, while Venezuela’s 2027s were unchanged at 48.25.

Argentina’s Bonar 2024s were unchanged at 116.10, and the 2026s ended at 107.50 from 107.125, he said.

“Flows continue to see better buying,” he said. “For overnight risk, we have the Bank of Japan, which should serve up some volatility when we get in tomorrow morning.”

Dubai bonds benefit

Bonds from Dubai benefitted on Thursday from the partial recovery in oil prices, he said, with bank curves remaining at “very tight levels.”

Investors were looking ahead to the release of second-quarter earnings from Turkish banks, he said.

“Profitability has likely seen another boost, driven by lower funding costs, loan re-pricing and further declining swap costs,” he said. “Asset quality remains in focus as Turkey suffers from a volatile business environment and lower tourist arrivals.”

The coup attempt on July 15 “will throw the spotlight on the impact after the second quarter,” he said.

Bulgarian Energy trades

The new issue of notes from Bulgarian Energy Holding EAD – €550 million 4 7/8% notes due Aug. 2, 2021 that priced Wednesday at 98.921 – was seen trading at 100¾ bid, 101 1/8 offered, a trader said.

JPMorgan was the bookrunner for the Regulation S deal.

Trinidad and Tobago talks bonds

Trinidad and Tobago set initial talk in the high-4% area for a benchmark-sized issue of dollar-denominated notes due in 10 years, a market source said.

The proceeds from the Rule 144A and Regulation S deal will be used for general budgetary purposes.

Other details were not immediately available on Thursday.

Adani gives guidance

India’s Adani Transmission Ltd. set talk in the Treasuries plus 290 bps area for an issue of dollar-denominated notes that will be due Aug. 4, 2026, a market source said.

The deal size is expected to total about $400 million.

Other details were not immediately available on Thursday.

This issuer is an electric power transmission company based in Ahmedabad, India.

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