South Africa, Hutchison, Israel bring deals to primary; oil news boosts EM; Turkey, Ghana eyed

By Christine Van Dusen

Atlanta, Sept. 29 – South Africa, China’s CK Hutchison Holdings and Israel sold new notes on a more positive Thursday for emerging markets assets, as oil producers on the sidelines of the International Energy Forum in Algiers reached a preliminary agreement to curb oil production for the first time since 2008.

“Individual output levels will only be finalized at the next official OPEC meeting in November, certainly a risk factor for the month ahead,” a London-based analyst said. “The agreement is, overall, supportive nonetheless and caught investors off-guard in terms of timing, given that Saudi Arabia and Iran had previously referred to the meetings as consultations while the Russian delegation had already left Algiers earlier in the day.”

In response to the new agreement, bonds from the Middle East were “broadly stronger,” he said, with cash pricing moving about 3 basis points tighter, on average.

Turkey remained an underperformer at the open, following the downgrade from Moody’s Investors Service.

But as the morning went on, Turkey’s bonds “turned a corner,” with the sovereign’s 6 5/8% notes due 2045 moving to 116 1/8 bid from 114 7/8, a trader said.

Investors were also keeping an eye on Ghana after the International Monetary Fund approved the next $116 million tranche of aid, following a review of economic and monetary reforms, the analyst said.

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