Emerging markets trading remains muted as risk aversion hits peso, trims Treasury yields

By Paul A. Harris and Aleesia Forni

Columbus, Ohio, April 9 - Trading remained muted on Monday, with most of the world on holiday, according to an emerging markets fixed-income strategist.

Cash and CDS spreads were generically five basis points wider in light trading, as the New York session got underway.

Asian high-grade names saw better buyers.

Asian high yield was unchanged despite Asian equities succumbing to weak payroll numbers in the Unites States and a rally in Treasuries as investors sought safety - 10-year Treasury yields went as low as 2.04% on Monday after spending much of last week above 2.15%.

High yield could see some widening on Tuesday, as many financial centers that were closed on Monday for the holiday resume trading, the strategist said.

Meanwhile, cash flows into emerging markets fixed income remain steady. The strategist cited data produced by EPFR Global indicating that hard currency funds saw $458 million of inflows during the week to April 4, while local currency funds saw $10 million of outflows.

Chavez returns to Cuba

In Latin America, Venezuelan president Hugo Chavez continued to be the main generator of financial news as he returned to Cuba for more cancer treatments, the strategist said, adding that the stricken leader is believed to have spent more than one-third of the year-to-date undergoing treatments in Cuba.

In a reflection of the diminished appetite for risk, the dollar had risen 1.4% against the Mexican peso, ahead of Monday's New York open, the source added.

CapitaRetail launches S$500 million

In the primary market, CapitaRetail China Trust's trustee, HSBC Institutional Trust Services (Singapore) Ltd., launched a S$500 million multicurrency medium-term note program, according to an announcement by manager CapitaRetail Trust Management Ltd.

DBS Bank Ltd. will act as arranger and dealer for the program.

Proceeds will be used to refinance existing borrowings, to finance acquisitions or investments and for general working capital purposes.

CapitaRetail invests in real estate used for shopping malls in China. The REIT is a subsidiary of CapitaMalls Asia Ltd., which is a Singapore-based owner, developer and manager of shopping malls in Asia.

Land Bank redeems notes

The Land Bank of the Philippines announced on Monday that it exercised the call option to redeem its $150 million 7¼% subordinated notes due 2016 in whole.

The notes were redeemed at par on Oct. 19.

The Manila-based financial institution said the notes will be delisted from the Singapore Exchange Securities Trading Ltd. in due course.

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