Emerging markets mostly firm on quiet summer Friday; South Africa’s Eskom eyes deal

By Rebecca Melvin

New York, July 27 – Emerging markets debt was firm but mostly quiet early Friday with the hard-currency new issue market decidedly inactive, although South Africa’s Eskom Holdings SOC Ltd. has mandated banks and scheduled a series of fixed-income investor meetings for a planned offering of U.S. dollar notes.

There has been a trickle of issuance this past week, mostly from the Asia region, with whatever has been seen in the Central & Eastern European, Middle East and Africa region likely to dry up when the calendar flips to August, market source say.

There were a few local-currency new issues on Friday, including Indonesia’s Rp 350 billion of 6.1% sukuk negara due 2037 issued to yield 8.56% on Friday by the Ministry of Finance, according to a term sheet.

Also Pune, India-based Bajaj Finance Ltd. sold Rs. 700 million of 8¾% secured redeemable debentures due 2023.

The emerging markets debt primary market was quieted by the typical summer slowdown this past week, while the secondary market firmed midweek owing to some funds flowing back into the sector, a brighter trade outlook and continuation of stabilizing currencies amid subsiding U.S. dollar strength, market sources said.

Emerging markets bond funds saw their third straight weekly inflow, which reversed more than two months of outflows. But Latin America bond funds, which had been helped by robust improvement in currencies, saw an outflow for the week ended June 25, according to data tracking firm EPFR Global.

Eskom eyes up to 10-year bond

Eskom, a state-run electric utility based in Johannesburg, plans to hold meetings starting on Monday in London and the United States. Meetings will wrap up on Wednesday with a deal to follow subject to market conditions.

The company is planning U.S. dollar-denominated notes with a maturity of up to 10 years, according to a market source.

Barclays, J.P. Morgan, Standard Bank and ABSA Bank are bookrunners for the Rule 144A and Regulation S deal.

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