Some EM bonds hit with contagion from commodities; Petrobras, Vale widen; Poland tightens

By Christine Van Dusen

Atlanta, Dec. 5 – Emerging markets assets put in a quieter session on Friday as a positive job report from the United States caused a weakness in commodities that then spread to the bond market.

“Weakness continues to creep in,” a New York-based trader said.

Bonds from Brazil-based Petroleo Brasileiro SA saw low volumes on Friday and moved wider by about 10 basis points, he said.

“Net widening for the week was 20 bps for the 2020s to 2044s,” he said.

Brazil-based Vale SA also saw its bonds move out on Friday, closing about 25 bps wider on the week, with extra pressure on the front end after the jobs report.

“Ecopetrol also pulled markedly lower today, after grinding higher, briefly, yesterday,” he said. “Most other credits were very quiet throughout the week.”

Corporate bonds from Peru and Chile, even the most liquid among them, didn’t see much action during Friday’s session.

And high-grade notes from Mexican names started to feel vulnerable, the trader said.

Some bonds did manage to perform on Friday. Spreads for local and euro-denominated bonds from Poland, Hungary and Romania tightened, this time on the news that the European Central Bank could institute quantitative easing in the first quarter of 2015, according to a report from Erste Group Research.

In deal-related news, Argentina is looking to issue $3 billion of bonds due in 2024 under local law, a market source said.

The sovereign will also offer owners of $6.3 billion of notes due in 2014 the opportunity to sell the bonds back or swap into the new bonds.

And Beijing-based residential property developer Guorui Properties Ltd. is looking to issue dollar-denominated bonds next week, a market source said.

Chinese developer does deal

On Thursday, Chinese development company Zhuhai Da Heng Qin Investment Co. Ltd. sold $1.5 billion 4¾% notes due Dec. 11, 2017 at par to yield 4¾%, a market source said.

CCB International, HSBC and Shanghai Pudong Development Bank were the bookrunners for the Regulation S deal.

© 2015 Prospect News.
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