Morning Commentary: EM debt slightly firmer in muted early trade; primary market quiet

By Rebecca Melvin

New York, Dec. 11 – Emerging markets debt was slightly firmer in quiet trade on Tuesday, with a drought in new issuance persisting as market players start to count the days left in 2018 on which new deals could be priced.

“Very quiet overall...no new deals,” a London-based trader said.

Spreads were a bit tighter, however, with spreads of most debt of the Middle East and Africa region tighter by single digits.

But Arab Petroleum Investments Corp.’s 2.383% notes due 2020 were tighter by 16 basis points at an indicated level of about 98. The multilateral development bank’s most recently priced deal, a 4 1/8% sukuk due 2023, was tighter by 3.5 bps and indicated at 99.43 bid, 100.18 offered. Apricor is based in Saudi Arabia.

Equities were up but slipping from their highs as investors weighed signs of progress in trade talks between the United States and China.

Also in focus was a reading of U.S. producer prices, which rose for the third consecutive month in November. The PPI, which had been expected to reveal slowing inflation, was higher as increases in costs for services offset a decline for energy products.

The Labor Department said its producer price index edged up 0.1% for November, after jumping 0.6% in October. Core PPI, excluding food, energy and trade services, rose 0.3% last month following a 0.2% gain in October.

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