Oil prices push EM wider; Turkish bonds dip on failed talks; Asia widens; Greece in focus

By Christine Van Dusen

Atlanta, Aug. 14 – Most emerging markets assets moved wider on Friday, as oil prices moved to their lowest levels in more than six years and investors adjusted to China’s three days of currency devaluation.

In trading on Friday, sovereign bonds from Turkey dipped on the news that the country’s efforts to forge an alliance with the pro-secular party had failed.

Corporates and banks from Turkey, however, were mostly quiet.

Looking to Ukraine, debt-restructuring talks – unsuccessful on Wednesday and Thursday – remained tense as they continued into Friday. The sovereign has a $60 million coupon due on Aug. 23 and $500 million of bonds maturing on Sept. 23.

The sovereign’s bonds moved up toward the end of the week for reasons difficult to pinpoint, said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

Asian credits ended the week weaker after the currency devaluations, a trader said.

“Broader [investment-grade] cash closed 1 bp to 3 bps wider,” he said. “Korea closed broadly unchanged.”

Notes from India were mixed by the end of the week, with 10-year corporates moving 2 bps to 5 bps wider and banks unchanged.

“Malaysia is under pressure, as oil continued its search for the bottom,” he said.

Market sources were also keeping an eye on Greece, where the parliament approved a Memorandum of Understanding with its European partners ahead of a confidence vote on Aug. 20.

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