Turkey widens; Brazil liquidity ‘deteriorating’; Albaraka advances deal; Alfa Bank eyes notes

By Christine Van Dusen

Atlanta, Nov. 18 – Emerging markets assets opened slightly softer on Wednesday morning as rates rallied and risk premiums tightened ahead of the release of October’s minutes from the Federal Open Market Committee, which later in the day showed that a December rate hike remains likely.

In trading, oil-related credits were firm, “but it feels like we are becoming immune to low oil prices and need a downdraft for oil-related credit spreads to be pushed wider,” a London-based trader said.

Notes from Turkey opened a few basis points wider after narrowing on Tuesday, he said.

Looking to Latin America, Brazil’s congress upheld eight of 13 presidential vetoes, including a salary increase for judicial workers and tax breaks for teachers, which “would have put a serious dent on the federal accounts,” a New York-based trader said.

Meanwhile, October tax collections were disappointing, according to new data, which “underlines the fact that Brazil’s fiscal accounts will continue to remain under severe pressure,” he said.

“On a separate note, the market continues to struggle with the deteriorating liquidity situation,” he said. “Dealers are extremely reluctant to have any position in the long end of the curves, which results in very high spread volatility.”

In deal-related news, Turkey’s Albaraka Turk Katilim Bankasi AS whispered its dollar-denominated sukuk at 10%, a market source said.

Russia’s OJSC Alfa Bank is looking to issue dollar-denominated notes due in November of 2018, according to a company announcement.

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