Turkey widens post-coup attempt; Busan Bank prices $250 million notes; EM credit tightens

By Paul A. Harris

Portland, Ore., July 18 – Emerging markets credit tightened on the New York day, with Brazil five-year credit default swaps closing at 290 basis points bid, in from 295 bps bid, and Mexico five-year CDS closing at 142 bps bid, from 144 bps bid, according to a market source.

The index was up a nickel from last week, at 93.20 bid, from 93.15 bid.

Spreads opened weaker with oil prices drooping below $45 per barrel but tightened as oil, emerging markets currencies and stocks improved on the day.

Latin American high yield finished mixed, with Argentina unchanged but Venezuela higher at the front end of the yield curve.

Venezuela’s state-owned PDVSA’s notes due in 2017 were 75 bid, up from 73½ bid.

Venezuela sovereign bonds due 2027 were also higher at 49½ bid, up from 49¼ bid.

There were two-way markets, but volumes were largely subdued, the source said.

In the primary market Busan Bank (Baa2/BBB+/BBB+) priced $250 million of 3 5/8% 10-year senior tier II notes at a 210 bps spread to Treasuries.

Meanwhile emerging markets technicals remain firm, with accounts seeing cash inflows. However, in the past two to three weeks, accounts were covering underweights, a market source said, adding that the latest headlines probably provide an incentive to stay underweight in the asset class.

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