Morning Commentary: Greece makes market defensive; Pacific Rubiales in the news; Asian issues suffer

By Christine Van Dusen

Atlanta, June 26 – Greece remained on the market’s mind on Friday morning, following inconclusive talks the day before, which kept emerging markets assets in a defensive mood.

“The euro group reportedly decided to meet again for more talks on Saturday,” according to a report from Barclays Research. “While the risk of a default next week has increased again, we still believe that a solution should be found.”

Asian bonds finished the challenging week with investment-grade spreads unchanged to a couple of basis points wider, a London-based trader said.

“Recent issues that printed this week suffered the most,” he said. “The rest of the sectors were stable, with India closing unchanged and short-end financials in demand. Korea is a couple wider.”

Meanwhile, Latin American bonds saw more sellers than buyers on Friday morning, a New York-based trader said.

And Ukraine saw two-way action for its sovereign bonds, with most of the action focused on the 2017s and 2022s, said Fyodor Bagnenko, a fixed income trader with Dragon Capital.

Also on Friday, Latin America-focused Pacific Rubiales Energy Corp. received attention again, this time after reports that Mexico’s Alfa SAB de CV could sell its 20% stake in Pacific Rubiales and won’t raise the takeover offer for the company made with Harbour Energy Ltd.

And yet another group recommended that shareholders reject the takeover bid. This time it was Glass, Lewis & Co., following the same recommendation issued by Institutional Shareholder Services.

In response, Pacific Rubiales’ bonds have fallen, a trader said.

In other news, the protests that have been taking place in Armenia’s capital for the last week are starting to “impact its sovereign eurobonds,” according to a report from Schildershoven Finance BV.

“We still believe they will not escalate,” the report said, “but Ukraine’s example has led investors to remain very cautious.”

© 2015 Prospect News.
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