Emerging market debt notches down in light trade; Brazil reopens 2015 bonds to add $600 million

By Reshmi Basu and Paul A. Harris

New York, June 20 - Emerging market debt edged lower in light volume while Brazil reopened its bonds due 2015 (B1/BB-) to add $600 million.

Overall, emerging markets saw lackluster flows, said a trader.

In Asian trading Monday, the market was firm, said one market source, adding that flows into the Philippines were muted. But there was real money buying in the long end on the back of positive economic news.

The Philippines said that its fiscal deficit stood at Ps. 7.6 billion in May, down from Ps. 12.7 billion pesos recorded in the same month last year.

However during trading, the Philippine bond due 2025 lost some traction by the close of trading in New York. The bond due 2025 closed down 3/8 of a point to 112 bid.

EM edges lower

Overall, emerging market debt nudged lower in light trade, said sources.

The market tracked U.S. Treasuries, which saw a downturn early in the session, said another trader.

"When they [Treasuries] were down a lot this morning, that's when we kind of had a sell-off. And the market kind of grinded back when Treasuries were up at the end of the day," he noted.

During trading, the Brazil C bond lost 0.005 to 101.87 bid while the bond due 2040 fell a quarter of a point to 119 bid. The Mexico bond due 2009 slipped 0.35 to 118.93 bid. The Russia bond due 2030 slid a quarter of a point to 109 7/8 bid.

In other developments, Ecuador bonds were hit by the downgrade by Standard & Poor's. The ratings agency lowered the country's long-term sovereign credit rating to CCC+ from B-.

The action reflects the agency's concerns about the ability of the government to cover its financing needs over the coming year, S&P said in a statement.

"[Ecuador] bonds traded down about half a point, then the bids came back," said the trader.

"Nothing has really detracted the market right now," he added.

During Monday's session, the Ecuador bond due 2030 fell ¾ of a point to 84¾ bid.

Meanwhile Monday's oil spike pushed Venezuela's paper higher, said a source. As oil prices topped $59 per barrel, Venezuela's paper emerged as one of the big winners of the session. The Venezuela bond due 2027 added 1¼ points to 103.90 bid.

Brazil reopens 2015 bonds

In the primary market, Brazil reopened its bonds due 2015 (B1/BB-) to add $600 million.

The retap priced at 100.945 to yield a spread of 363 basis points more than Treasuries.

The trader added that the new announcement impacted the market.

"We traded the '15s. They traded off this morning, kind of brought the rest of the middle curve down, but they seemed to have stabilized at the end of the day," he remarked.

The deal completes Brazil's financing for 2005.

Citigroup and HSBC ran the offering of Securities and Exchange Commission-registered notes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.