Oil price decline pressures high beta EM bonds; Minerva prices bonds; Venezuela debt falls

By Paul A. Harris

Portland, Ore., Sept. 9 – Declining crude oil prices on Friday pressured high beta emerging markets bonds with deep exposure to oil, a trader said.

The barrel price of West Texas Intermediate crude for 2016 delivery was down a buck, or 2.1%, at $46.62 in the New York mid-morning.

Equities and government bonds were also creating a drag on emerging markets debt prices, a trader said.

Brazilian food processor Minerva SA priced $1 billion of 6½% 10-year bonds (BB-) at 99.096 to yield 6 5/8% on Thursday.

The deal was trading softer heading into Friday afternoon at 99.05 bid, 99.35 offered, a portfolio manager said.

It was risk off, as Friday progressed, with better sellers in Latin American corporates, a source said.

Bonds of Ecopetrol SA were down 2½ points.

Cemex paper was off 1¼ points.

The fall in crude oil prices took an expected toll on Venezuelan debt.

Venezuela sovereign bonds were down generically 1% to 1.25% across the curve, early Friday New York-time, a trader said.

Venezuela’s benchmark 9¼% notes due 2027 were down ¾ of a point at 50¼ bid, 51 offered.

At the long end of the curve the 7% bonds due 2038, at 42¼ bid, were yielding 17¼%, the trader said.

Quasi-sovereign paper of Petroleos de Venezuela, SA (PDVSA) was down ¼% to ½%.

The PDVSA 6% notes due 2024 were 39 bid, 39¾ offered, down ¼.

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