Morning Commentary: Poland’s mBank plans new euro deal as EM debt ebbs in quiet trade

By Rebecca Melvin

New York, Aug. 23 – Poland’s mBank SA announced Thursday plans for a new offering of short- to medium-term euro-denominated notes, representing the first signs of life in the Central & Eastern Europe region since late July.

But emerging markets debt overall was a bit wider, albeit in quiet trade, a London-based trader said, amid a higher dollar and somewhat stronger U.S. Treasuries. Although Treasuries were most recently flat.

Markets are normally quiet in the last two weeks of August, but the summer lull is seemingly more pronounced for emerging markets this year as dollar strength and trade tensions have increased uncertainty.

mBank will hold investor meetings next week in Germany and London with a senior unsecured benchmark expected to follow soon, subject to market conditions.

The deal represents the first new issuance for CEE since Bulgarian Energy Holding EAD priced a €150 million tap of its 3½% notes on July 24.

In the broader markets, U.S. stocks were trading up from a mixed start, and Treasuries stood pat. The United States put tariffs on $16 billion of Chinese goods despite the kick off of talks between lower-level U.S. and China trade officials slated for the next two days.

The new tariffs, mainly on Chinese semiconductors, chemicals, plastics, motorbikes and electric scooters, are on top of $34 billion of Chinese imports targeted last month.

China simultaneously retaliated with $16 billion worth of additional import tariffs on U.S. products including fuel, steel products, autos and medical equipment.

The potential fallout from this and other trade conflicts have introduced uncertainty to the markets, which are convinced regardless of a U.S. rate hike coming next month. The outlook after that has become less clear. One focus for the rest of this week as market players search for direction will be the annual Jackson Hole symposium meeting of U.S. Federal Reserve officials and Fed chairman Jerome Powell’s speech scheduled for 10 a.m. ET on Friday.

© 2015 Prospect News.
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