Morning Commentary: EM mostly weaker; Dar Al-Arkan drops; investors question Venezuela default

By Rebecca Melvin

New York, Nov. 14 – Emerging markets were mostly weaker early Tuesday with global stocks and oil also lower and a bid in U.S. Treasuries.

Saudi Arabia-based property developer Dar Al-Arkan Real Estate Development Co. was notably weak on the heels of dramatic spread widening and lower pricing in Qatar’s Ezdan Holding Group 2021 and 2022 notes on Tuesday. Ezdan is also a real estate property developer.

Dar Al-Arkan’s near-dated bond, the 5¾% notes due 2018, traded down almost 0.5 point and its spread widened by 80 basis points. The moves weren’t as drastic for Dar Al-Arkan’s newest bond, 6 7/8% Islamic bonds due 2022, which priced in April and were down 0.25 point to 0.5 point and wider by 20 bps.

Dar Al-Arkan’s 6½% notes due 2019 were wider by 74 bps, according to a market source.

Meanwhile the International Swaps and Derivatives Association Inc. has been asked by investors whether Venezuela is in default due to late payment of coupons on sovereign bonds. ISDA is already looking into whether Petroleos de Venezuela SA has triggered a credit event through a late payment of its bond that matured on Nov. 2, 2017.

Despite market weakness, JSC NC Kazakhstan Temir Zholy priced $780 million of 4.85% 10-year unsecured guaranteed notes (expected ratings: Baa3//BBB-) at 100.393 for an initial yield of 4.8%, a market source said on Tuesday.

Pricing was tightened to 4.8% from initial talk in the 5% area.

The company is a railway transportation company owned by the Republic of Kazakhstan.

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