China’s economic injection, Fed official’s remarks boost sentiment; issuers advance deals

By Christine Van Dusen

Atlanta, Aug. 27 – Most emerging markets bonds ripped tighter on Thursday after China pumped billions of yuan into its economy and risk appetite improved on the rebound in U.S. and European equities.

Oil-related bonds also benefitted on Thursday as oil prices increased.

“The EM asset class is on fire today,” a London-based trader said. “We came in on the back of a strong U.S. equity close, followed by a bounce in Asian equities as Chinese authorities interfered again.”

China’s move – plus dovish comments from New York Federal Reserve President William Dudley – “supported risk and took us off the lows,” he said.

Bonds from Turkey were among the day’s solid performers, with the belly of the curve again outperforming, another trader said.

“Bank paper and corporates are lagging the sovereign move by 2 basis points to 3 bps,” he said.

The day’s first trades from Latin America were also strong, with Brazil’s 2025s moving about 8 bps tighter and its 2045s tightening by about 10 bps, a New York-based trader said.

In deal-related news, Trade and Development Bank of Mongolia LLC mandated bookrunners, Lebanon set the size for an upcoming transaction, Russia’s OJSC MMC Norilsk Nickel pondered a bond deal, and South Africa sought banks while Kurdistan postponed plans for an issue of bonds.

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