Issuance from Kexim; EM assets improve on QE hopes in Europe; Brazilian corporates widen

By Christine Van Dusen

Atlanta, Oct. 1 – Korea Export-Import Bank sold notes and emerging markets assets opened stronger on Wednesday, recovering somewhat from recent weakness, as the increasing likelihood of quantitative easing in Europe boosted spirits.

Meanwhile, the European Union meeting on Tuesday that focused on the conflict between Russia and Ukraine was mostly uneventful, with sanctions remaining in place, a London-based analyst said.

“As long as the ceasefire officially holds, and assuming there is progress on buffer zones, we still think there will be pressure on the EU to drop certain sanctions,” the analyst said. “But clearly October, particularly with the planned Ukraine elections at the end of the month, could present opportunities for an escalation in tensions.”

Russian credit default swap spreads were about 4 basis points tighter, he said.

“Turkey credit default swaps are 3 bps tighter, and Central and emerging Europe and the Middle East are also better as the market recovers from the recent weakness,” he said.

Also improving the picture on Wednesday was the increasing likelihood of quantitative easing in Europe.

Meanwhile, bonds from Brazil-based Petroleo Brasileiro continued to widen, moving out on the month by as much as 30 bps on the long end and 20 bps in the belly of the curve, a New York-based trader said.

The company’s 2024s widened 60 bps on the month, he said.

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