Morning Commentary: EM debt flat in light trade; Mexico mostly steady after gains

By Rebecca Melvin

New York, Aug. 28 – Emerging markets debt was steady in light trade on Tuesday, with little follow through action from Latin America where a burst of positive activity came on the heels of the trade agreement that was announced between Mexico and the United States on Monday.

Prices and spreads for Mexico’s bonds had tightened on average 8 basis points to 10 bps on Monday.

On Tuesday, Mexico’s 6½% notes due 2027 were active in trade and were last at 102.43, which was steady from 102.00 to 102.45 on Monday.

“The agreement gave positive action across all of Latin America with Mexico and low beta names outperforming,” a New York-based market source said. The agreement is positive for Mexican assets, “but it’s a tad bit quiet today and not much follow through from yesterday’s bid tone.”

Elsewhere, the Bank of Cyprus Co. Ltd. announced that it has priced a €220 million issue of fixed-rate reset perpetual additional Tier 1 capital securities with an initial coupon of 12½%. The coupon of the Regulation S deal will be reset every five years.

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