Morning Commentary: Srpska prices €168 million 4¾% notes; market tone slightly brighter

By Rebecca Melvin

New York, June 22 – Republic of Srpska priced 4¾% five-year notes at the smaller end of talked deal size early Friday, with €168 million ultimately pricing compared to a maximum €200 million deal initially talked and not quite reaching the midpoint of the €150 million to €200 million range later discussed.

Srpska is autonomous entity in Bosnia and Herzegovina.

Overall emerging markets debt was indicated stronger on Friday morning, showing a continued recovery from a steep sell-off on Tuesday amid heightened trade war fears.

However, market activity was diminished heading into the weekend, with not only the recent market volatility taking a toll on trading and new issue vigor but also the FIFA World Cup in Russia stealing attention from markets, sources said.

A slightly stronger tone in the Central & Emerging Europe, Middle East and Africa region in the last couple of days yielded not only Srpska’s deal but also an offering from Bulgarian Energy Holding EAD, a state-owned electricity and gas company. It priced €400 million of seven-year eurobonds at par to yield 3½% on Thursday.

Also appearing from the region was state-owned Lithuanian utility Lietuvos Energija UAB, which is scheduled to hold roadshow meetings in the week ahead for a possible €300 million minimum Regulation S green bond, to price subject to market conditions. The bonds were seen having a seven- to 12-year maturity.

Brazil was a bright spot in the emerging markets with the Latin America country’s stocks and bonds moving up amid relative market calm.

But Mexico, which has been quieted by uncertainty regarding its upcoming presidential election and renegotiation of the North American Free Trade Agreement, was pressured by data showing that the Mexican economy shrank 0.6% in April from the previous month as output declined across sectors. The Mexican agricultural sector led declines with a 1.7% drop in April from March.

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