Primary hosts Poland, ICBC, Evergrande; roadshows ahead; Brazil stabilizes; Kazakhstan eyed

By Christine Van Dusen

Atlanta, Jan. 11 – Poland, Industrial and Commercial Bank of China Ltd. and China’s Evergrande Real Estate Group Ltd. sold new bonds on Monday as investors in emerging markets assets remained cautious amid increasing volatility related to China and the prices of oil and copper.

“Timid, slow start here,” a trader said. “Super-light Street volumes, customer inquiry light but normal.”

Among sovereign names, those from Sub-Saharan Africa have been hit the hardest so far, a strategist said.

High-grade names from Brazil – like Gerdau SA and Braskem SA – gained some stability on Monday, a New York-based trader said.

And even as copper prices struggled, Chile’s Corporacion Nacional del Cobre de Chile (Codelco) found more Street support and saw its spreads stabilize, he said.

“Institutional flows remain mixed, with better buyers of the 2025s and sellers of the longer issues,” he said. “Other Chile high-grade remains stable.”

The market appeared to be pricing in credit risk and liquidity premiums, as well as “dollar strength and depressed oil prices for the foreseeable future,” a London-based trader said. “The market is lower across the board.”

Investors were also keeping an eye on Kazakhstan, as the sovereign’s $64 billion sovereign wealth fund looks like it could be drained within the next 10 years if oil prices remain low, the strategist said.

“The depletion will likely also exert pressure on global asset managers, following withdrawals from other sovereign funds and especially Saudi Arabia already last year,” he said.

© 2015 Prospect News.
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