Morning Commentary: Greeks oppose bailout terms; risk-off mood persists; trading limited

By Christine Van Dusen

Atlanta, July 6 – Trading of emerging markets bonds was limited on Monday morning after Greek voters overwhelming voted against lenders’ conditions for another bailout and the Greek finance minister resigned.

The European Governing Council was set to meet later on Monday, and an emergency summit of European leaders has been scheduled for Tuesday.

“It’s risk-off in Asian credits after Greece voted ‘no’ to austerity,” a London-based trader said. “Investment grade cash started the day 3 basis points to 5 bps wider with little selling. The overall tone was defensive but orderly.”

Bonds from Central and emerging Europe, the Middle East and Africa were wider but “fairly muted and lackluster” during the early session, another London trader said.

The sovereign curve for Turkey was 6 bps to 8 bps wider while the belly of the curve for South Africa moved 10 bps to 15 bps wider, he said.

“Ghana was marked lower, and the best part of 20 bps to 25 bps wider on the day,” he said.

Looking to the Middle East, a trader was expecting to see some demand for Dubai's Jebel Ali Free Zone (Jafza) on Monday, following the company’s upgrade by Fitch Ratings to investment grade.

“Looks cheap to DP World’s 2020s, although there is a 14-point cash price differential,” he said. “Perpetuals are a bit more two-way today. Morocco sees a bit more support.”

In other news, Latin America-focused Pacific Rubiales Energy Corp. received attention after the vote on the takeover bid from Mexico’s Alfa SAB de CV and Harbour Energy Ltd. was postponed from July 7 to July 28.

According to the O’Hara Administration, which represents a significant number of Pacific Rubiales’ bondholders, about 60% of shareholder votes cast by proxy opposed the deal.

“Only a few prints so far,” a New York-based trader said of Pacific Rubiales’ bonds.

© 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.