Debt steadier as selling hits rupiah; Argentine peso improves; Al Hilal, ADIB eye sukuk

By Rebecca Melvin

New York, Sept. 5 – Emerging markets debt steadied somewhat on Wednesday with some currencies dropping lower, like the Republic of Indonesia’s rupiah, which was newly in the crosshairs and dragging that country’s sovereign bonds lower; but the Argentine peso improved slightly.

The Indonesia rupiah dropped Wednesday on the heels of a slump in the South African rand on Monday and Tuesday and ongoing pressure on the Argentine peso, which dropped more than 5% on Monday and Tuesday. But on Wednesday the Argentine peso strengthened by more than 1%. Argentine government officials were meeting with the International Monetary Fund in Washington for a second day on Wednesday.

In Indonesia, the government responded to the selling with rupiah bolstering measures, including selling dollars and buying government bonds, imposing new import taxes and announcing that several power plant construction projects that had not yet secured financing were being postponed.

Overall, emerging markets debt was more stable following moves lower on Tuesday when South Africa’s sovereign and corporate bonds weakened.

In the Middle East, Al Hilal Bank and Abu Dhabi Islamic Bank were meeting with fixed-income investors regarding proposed dollar-denominated sukuk, or Islamic bonds. ADIB is proposing a benchmark of tier 1 perpetual Islamic notes, which will be non-callable for five years, and Al Hilal is planning a five-year sukuk.

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