New issues from Shanghai Electric, Ecobank Nigeria; Russia headlines suppress risk appetite

By Christine Van Dusen

Atlanta, Aug. 7 – China’s Shanghai Electric Group Corp. and Ecobank Nigeria Ltd. sold notes on a slow Thursday as the growing conflict in Russia and Ukraine dinged investor confidence and pushed Russian bonds down.

“Global risk sentiment remains weak, as European growth concerns and escalating tensions surrounding the Ukraine situation dominate holiday-thinned markets,” according to a report from Barclays. “Russia has now decided to ban agricultural imports from countries that supported sanctions.”

“It seems that at this stage the military hostilities in the East are mostly priced in, though a direct Russian invasion is, of course, not,” said Svitlana Rusakova of Dragon Capital.

Still, spreads from other areas of emerging markets managed to stabilize following Wednesday’s sharp widening, according to the Barclays report.

Also on Thursday, Ukrainian agricultural company Mriya Agro Holdings saw its bonds dip on the news that the company failed to make payments on some debt and warned that some restructuring may be necessary.

From Latin America, some bonds saw an uptick on Thursday morning, a New York-based trader said.

Spread-based credits moved as much as 4 basis points tighter early in the session while high-grade issues were mixed and high-yield names continued to struggle, he said.

By midday, the market paused a bit on geopolitical concerns, and the Petroleo Brasileiro SA (Petrobras) curve got “slammed,” he said.

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