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Morning Commentary: EM Investors cautious on oil prices, ECB; Sharjah ticks higher; Isbank widens
By Christine Van Dusen
Atlanta, Jan. 21 – Emerging markets investors remained cautious on Thursday morning, as oil prices remained low and the European Central Bank was set to make a policy decision.
“[Emerging markets] continue to face the brunt of the rise in risk aversion, and central banks are erring on the side of easier monetary policy,” according to a report from Barclays.
In trading, the new issue from the Emirate of Sharjah – $500 million 3.839% notes due in 2021 that priced Wednesday at mid-swaps plus 250 basis points – moved up a quarter-point on Thursday morning, a trader said.
HSBC was the global coordinator and Bank of Sharjah, Barclays, Commerzbank, Dubai Islamic Bank, HSBC and Sharjah Islamic Bank were the joint lead managers and bookrunners for the Regulation S deal.
From Latin America, bonds from Panama started the day with a “better tone,” a London-based trader said. Buyers were spotted for the sovereign’s 2024s and 2053s.
Investors were keeping an eye on Turkey-based Turkiye Is Bankasi AS (Isbank) after an economic adviser to the country’s president called for nationalization of the bank, which is 28%-owned by the opposition Republic People's Party (CHP).
The ruling Justice and Development Party (AKP) seems to be going “a step further to weaken the CHP and affiliated organizations,” the strategist said. “AKP officials have intended to weaken companies for their political stances in the past, although we don’t think that the nationalization of Isbank would be a rational or realistic scenario.”
In response, Isbank’s bonds traded 20 bps wider, in line with other Turkish banks.
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