Turkey widens; Mexico covers 2019 financing needs with €2.5 billion in dual tranches; Slovak prices

By Rebecca Melvin

New York, April 2 – Emerging-markets sovereign debt was slightly wider on Tuesday as investor enthusiasm died down following positive indicators of global growth on Monday.

“April 1st saw very positive market tone starting with Asia, with release of China PMI of more than 50,” a New York-based market source said, referring to China’s manufacturing data for March on Monday.

The emerging-markets sovereign bond market spread ended 3 basis points wider on Tuesday compared to a move 9 bps tighter on Monday.

Meanwhile the Turkish lira weakened slightly on Tuesday to 5.61 lira per U.S. dollar and Turkey’s sovereign bonds widened 13 bps, compared to a contraction on Monday.

The sovereign’s financial assets gyrated after the results of mayoral elections on Sunday dealt a blow to President Recep Tayyip Erdogan’s ruling Justice and Development Party, or AKP.

“...possible negative reaction to the election results was overcome by a strong market,” the market source said referring to Monday’s pricing action.

The Ukraine, which had a presidential election race surprise on Sunday, was 6 bps tighter on Tuesday to 610 bps. Turkey, on the other hand, widened to 468 bps. Volodymyr Zelenskiy, a television comedian with no prior political experience, beat sitting president Petro Poroshenko.

U.S. stocks and bonds wavered with the yield on the benchmark 10-year Treasury notes slipping to 2.471% from 2.496% on Monday.

Also, on Tuesday, the United Mexican States priced €2.5 billion in two tranches of seven- and 20-year notes, covering its financing needs for 2019, the country’s finance ministry said.

The sovereign’s €1.5 billion 1 5/8% seven-year notes priced at 99.712 to yield 1.669%, or a yield spread of mid-swaps plus 145 basis points. And the €1 billion 2 7/8% 20-year notes priced at 98.598 to yield 2.969%, or a spread of 195 bps over mid-swaps.

The Slovak Republic was back in the market for the first time since last June with a €1 billion issue of ¾% notes due 2030.

The one-day market resulted in an issue reoffered at 99.685 to yield 0.780%, or a spread over mid-swaps of 21 bps, according to a syndicate source. Pricing was tight to guidance for a yield of mid-swaps plus 25 bps area, which was revised from earlier talk in the mid-swaps plus 30 bps area.

The order book was in excess of €5 billion at the time that final terms were set.

Pricing was eyed for Alrosa Finance SA, which was pricing new notes in conjunction with a tender to purchase $400 million of its $894,384,000 of outstanding 7¾% notes due 2020.

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