Morning Commentary: Spreads mixed as MENA sovereign debt outperforms in quiet market

By Rebecca Melvin

New York, July 18 – Spreads on emerging markets debt were mixed on Wednesday with sovereign debt in the Middle East and Africa region holding in better than most banks and corporate debt, according to a London-based market source.

Egypt’s sovereign curve was tighter, for example, with issues in on average of 3 basis points to 5 bps, with the exception of its short dated 2020 notes, which were 8 bps wider.

Morocco and Qatar were also slightly tighter, as was the longer end of Lebanon. But Saudi Arabia was mostly wider, contrary to the recent trend in Saudi paper, which has been among the strongest MENA issuers over the past month.

In terms of pricing, the market was nearly flat to somewhat lower as EM continues to grapple with the prospects of higher rates, dollar strength and currency woes. U.S. Federal Reserve chairman Jerome Powell’s testimony to members of Congress in Washington points to resolve to remain on pace for gradual rate increases this year.

The emerging markets debt primary was quiet.

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