EM debt spreads mostly edge wider, but market quiet as stocks slide, oil prices continue to edge better

By Rebecca Melvin

New York, Nov. 19 – Spreads for emerging markets debt were mostly edging wider on Monday although the market was quiet as stocks fell, rates came in slightly and the oil patch continued to recoup after touching a low mark for the year last week.

“Spreads overall are typically struggling,” a London-based trader said.” Stocks are lower and oil is not doing much.”

Oil prices ended the day continuing to recoup after benchmark crude had its steepest plummet in more than three years on Nov. 13. The drop culminated a multi-week slide that hurt some of the smaller exporters like Ecuador.

But on Monday, West Texas Intermediate crude oil for December delivery rose 0.5% to $56.76 a barrel on the New York Mercantile Exchange.

Stocks sold off with the tech titan Apple Inc. joining other sector names in bear market territory, or a level that is 20% below its all-time stock market high.

Currencies were mostly little changed on the day with the dollar flat. The Argentine peso and Turkish lira as well as the Mexican peso and South African rand remained tighter Monday, but still close to recent weak level.

Also having a quieting effect is the U.S. Thanksgiving holiday, which will close financial markets in the United States on Thursday and bonds markets on Friday as well.

In the broader markets, The Dow Jones industrial average fell 395.78 points, or 1.6%, to 25,017.44; the S&P 500 stock index closed down 45.5%, or 1.7%, to 2,690.73 but the Nasdaq stock index plunged 219.40 points, or 3% to 7,028.48.

On Monday, Petroleos Mexicanos SAB de CV’s 6½% notes due 2027 were flat to slightly lower at 93.2. Pemex’s 6¾% notes due 2047 were last trading little changed at 83.

In the primary market, Emirates NBD Bank PJSC was said to be awaiting an opportunity to price this week and was thus reinstated on the forward calendar after the Dubai-based lender failed to price its benchmark-sized offering of dollar-denominated five-year notes in the last two weeks after holding an investor meeting on the notes on Nov. 5.

Asia was the most active region of the day with several issuers announcing proposed notes deals.

China Evergrande Group’s Scenery Journey Ltd. subsidiary plans to price an add-on to its 11% senior notes due 2020, according to a company news release. The Guangzhou, China-based real estate development company priced the original $565 million of 11% notes as part of a triple tranche offering on Oct. 30.

Times China Holdings Ltd. plans to price U.S. dollar-denominated senior notes and China’s Yanzhou Coal Mining Co. Ltd. said it plans to issue U.S. dollar-denominated senior bonds (BB) to institutional investors under Regulation S, while the Export-Import Bank of Korea (Kexim) is planning to issue dual tranches of dollar-denominated fixed-rate notes in a deal registered with the Securities and Exchange Commission.

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