Russia, Ukraine crisis ramps up; EM remains bullish; Lat-Am tightens; Poland plans panda bonds

By Christine Van Dusen

Atlanta, Aug. 12 – Tensions between Russia and Ukraine weighed on emerging markets assets on Friday, but Latin American bonds still managed to finish the day with slightly tighter spreads, buoyed by a rally in U.S. Treasuries.

“Markets remain in a very bullish mood, as the three main U.S. stock indices all closed at record levels since 1999,” a London-based analyst said. “This was little dented by weaker-than-expected data from China. Oil prices have, however, leaped as Saudi Arabia’s energy minister has raised the hopes of price stabilization measures.”

Also impacting the mood was the news that Brazil-based Petroleo Brasileiro SA’s earnings declined. That led Brazil sovereigns to outperform by a wide margin on Friday, a New York-based trader said.

Brazil’s five-year credit default swaps spreads ended at 258 bps from 259 bps after trading as tight as 257 bps, he said, while Mexico’s were unchanged at 136 bps.

High-yield names from the region finished mixed, the trader said.

PDVSA’s 2017s closed at 72.50 from 72.60, Venezuela’s 2027 were unchanged at 46.65, and Argentina’s Bonar 2024s moved to 118 from 117.75. The latter sovereign’s 2026s closed at 111.75 from 111, he said.

Meanwhile, bonds from the Middle East and North Africa were tighter on Friday, with African sovereign bonds outperforming, a London-based trader said.

In other news, Poland has mandated Bank of China and HSBC as joint lead underwriters for an issue of renminbi-denominated bonds, according to an announcement from the sovereign.

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