EM assets weaken after holiday, before ECB; Yapi Kredi plans notes; Petrobras, Vale suffer

By Christine Van Dusen

Atlanta, Nov. 30 – Emerging markets assets were weaker on Monday, with dealers avoiding risk ahead of the European Central Bank’s rate decision and non-farm payrolls data from the United States, both expected later this week.

“The weakness in emerging markets persists,” a trader said. “Rates remain range-bound as we await this week’s ECB policy action.”

In deal-related news, Istanbul-based lender Yapi ve Kredi Bankasi AS (Yapi Kredi) set off on a roadshow for a dollar-denominated issue of notes that is expected to come to the market in early 2016, a market source said.

BofA Merrill Lynch, Citigroup, MUFG Securities and UniCredit Bank are the bookrunners for the Rule 144A and Regulation S deal.

“The roadshow sees strong demand, out of the gates,” a trader said. “If the feedback and demand is there I’m sure they will not wait. Limited reaction on the bank curves so far.”

The marketing trip is being held in Asia, Europe and the United States.

Also from Turkey, the sovereign over the weekend was granted $3 billion to help with Syrian refugees, which also opens “the possibility of EU membership once again,” a trader said.

“But it is early days, and we would have to see policies from Turkey align with Europe first to gain any traction,” he said. “Flows have been mostly selling, but volumes remain light.”

Banks and corporates from Turkey were softer on Monday, “as dealers become risk-averse at this time of the year,” he said, “leading to prices being marked lower on low volumes.”

Petrobras, Vale sink

Looking to Latin America, trading was slow on Monday, with Brazil-based Petroleo Brasileiro SA moving lower by about a ½ point, a New York-based trader said.

Brazil’s Vale SA also continued to decline on Monday as iron ore hit new lows and the government considered suing the company for its role in the dam burst and flood from the Samarco mine.

On a spread basis, Vale’s bonds moved as much as 40 basis points wider on Monday, he said.

Fibra Uno sets talk

Mexico’s Fibra Uno set talk for a $500 million issue of 10-year notes in the Treasuries plus 312.5-bps area, a market source said.

BofA Merrill Lynch, Credit Suisse, HSBC and Santander are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes, including the acquisition of additional properties and the repayment of indebtedness.

Fibra Uno acquires, develops and operates commercial real estate in Mexico.

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