Emerging market debt trades a tad higher on appetite for risk; Asia firmer in thin trading

By Reshmi Basu

New York, April 4 - Emerging market debt edged higher Wednesday amid thin trading volumes, despite weaker than expected U.S. economic data.

With the holiday Easter weekend approaching, volumes have been thinning out. Nonetheless, market sentiment has been positive as the appetite for yield has pushed spreads to historical low levels. During the Asian trading session Wednesday, credits were firmer as they traded in tandem with stronger regional equity markets.

On the sovereign side, one market source noted that investors were adding some risk and covering shorts, which resulted in the long-end of the Philippines' curve moving up by 1/8 to 3/8 point.

Overall, there were few trades Wednesday as another source observed that high grade spreads appeared to have decoupled from equity markets, as they remain in a standstill.

Firm during New York hours

Returning to the New York session, prices remained firm amid light volumes while the focus continued to remain on the U.S. economic outlook.

More data released Wednesday pointed to a slowdown in the U.S. economy. The Institute for Supply Management's (ISM) non-manufacturing index for March slid to 52.4, the lowest level in four years.

"While everyone is mired in the [U.S.] economic story, nothing seems to be able to derail sentiment," noted a buyside source.

"There's an appetite for paper. And very few issuers are coming to the market," he added.

Among benchmark names, the Brazilian bond due 2040 added 0.05 to 135 bid, 135.10 offered. The Russian bond due 2030 gained 0.01 to 113.438 bid. 113.508 offered. And the Turkish bond due 2030 was higher by 0.13 to 154.25, 154.75 offered.

Ukraine resilient amid dispute

In country specific events, political tension in the Ukraine has escalated followed the dissolution of parliament by president Viktor Yushchenko,

Nonetheless, one market source said, "The impact has been relatively muted."

In trading Wednesday, the Ukrainian bond due 2013 was unchanged to 107.50 bid, 108 offered.

Elsewhere, the new bonds issued by Venezuela's state-run oil company PDVSA continued to move up in the secondary. The PDVSA bond due 2017 was spotted at 84¼ bid, up from the previous close of 83½ on the bid side.

Leading up to the observance of Easter this weekend, locals have been on the sidelines. There may be some selling on Monday when the market returns to full force, according to a source.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.