EM rallies into end of week on ECB speculation; Namibia, Eco-City trade; Lebanon deal ahead

By Christine Van Dusen

Atlanta, Oct. 23 – Emerging markets assets finished the week on strong footing, with Asian bonds “on fire” on Friday as investors speculated that the European Central Bank could engage in further easing.

In response, spreads moved between 3 basis points and 10 bps tighter on Friday morning.

“Asian credits started the day 5 bps to 8 bps tighter with the positive backdrop overnight,” a London-based trader said. “The market pulled back to 1 bp to 3 bps tighter after some real money decided to take profit. In the afternoon session, momentum picked up again, with real-money buyers out of Europe, and we finished the day 5 bps to 8 bps tighter.”

Many Latin America bonds were “markedly stronger” during the Friday session, a New York-based trader said.

“Tough to decipher if any particular country or sector is leading us higher, but [Petroleo Brasileiro SA] has joined the party after quite the lackluster week – only buyers, and bonds up over one point, which has now become known as a big intraday move,” he said. “We also see [Vale SA] moving much tighter, 10 bps at least, as their third-quarter numbers looked OK.”

In other news, Lebanon is looking to issue new notes as part of an exchange offer, according to an announcement from the sovereign.

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