Emerging markets quiet; Asian sovereigns succumb to volatility; Russian corporates hold up

By Aleesia Forni and Paul A. Harris

Columbus, Ohio, April 23 - It was a very quiet day in emerging markets on Monday, according to a New York-based syndicate source who had seen no new issues during the day.

Asian sovereigns were weak during the Asian session, underperforming high-grade corporate bonds by approximately 5 basis points, and weakened further as the equity markets in Europe came under pressure during the European session, a London-based trader said.

Conspicuous among the underperformers were Indonesia's 7¼% global bonds due 2015 and 5¼% bonds due 2042 and the Republic of the Philippines' 5% global bonds due 2037, all ½ point down.

However, the Philippines' 5½% bonds due 2026 held relatively firm, down just 1/8 point.

The Markit iTraxx SovX CEEMEA index, which tracks Central and Eastern Europe, the Middle East and Africa credit default swaps, traded at 297 bps during the Friday London session, 5 bps wider than Friday's close.

Asian high grades

Asian high-grade corporate bonds were weak and illiquid, with last week's new issues hit steadily as dealers pared back on risk.

The new Beijing Enterprises Holdings Ltd. 4½% notes (Baa1/A-/) due 2022 were 5 bps wider. The $800 million deal priced last week at Treasuries plus 260 bps, according to a company news release.

However, the newly minted 3½% notes from South Korea's Hana Bank (A1/A/) held up well, the London trader said. The $500 million issue of 5.5-year notes priced last week at a 265 bps spread to Treasuries.

Older issues were generally 3 bps to 5 bps wider, the trader added.

Russian corporates

Activity in the Russian space remains solid, according to a London-based source.

Among recently issued corporate bonds from issuers in that region, Evraz Group SA's (Ba3/B+/BB-) 7¾% notes due 2017 were 100.15 bid, 100.30 offered. The $600 million deal priced at par early last week.

Nomos Bank's 10% notes due 2019 were 99.90 bid, 100.10 offered during Monday's session. The $500 million deal (B1//BB-) priced at par last week.

OAO Raspadadskaya also priced a deal late last week, taking advantage of a "bout of Russian buying excitement," and also managed to hold around its re-offer during London's session. The company priced $400 million 7¾% notes (B1//B+) due 2017 at par on Friday.

VTB Capital SA's 6% notes due 2017 (Baa1/BBB/BBB) were 100 1/8 bid, 100¼ offered. The $1.5 billion issue priced in early April.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.