Investors await OPEC meeting; South Africa firm; two-way for Turkey; Brazil risks increase

By Christine Van Dusen

Atlanta, Nov. 28 – Flows for emerging markets bonds were mostly positive on Monday as investors adjusted to the idea of a Donald Trump presidency in the United States and awaited the meeting of the Organization of Petroleum Exporting Countries.

“Early flows look positive on the weak dollar as the ‘Trump’ trade gets unwound ahead of a data heavy week and November month-end window dressing,” a London-based trader said.

Members of OPEC will meet on Wednesday to attempt to finalize plans for a production decrease, which could prove difficult to execute.

“The group remains divided about how to share the curbs,” according to a report from Schildershoven Finance BV. “Saudi Arabia, for the first time, on Sunday suggested OPEC doesn’t necessarily need to curb output and pulled out of a scheduled meeting with non-member producers, including Russia.”

In response, “some oil credits like Kazakhstan are seeing some paper coming out of Asia,” the London trader said.

Looking to Latin America, investors were whispering about a possible issue of notes from El Salvador, as the sovereign seeks to refinance short-dated debt.

In other news from the region, Brazil’s bonds increased after a fourth minister resigned amid corruption allegations that have entangled the country’s president.

“This event may become another shock for the Brazilian economy in the worst-case scenario,” according to a report from Schildershoven. “This event may trigger a substantial market correction as accusations against the president would influence the government’s ability to implement reforms.”

Some names firm up

In trading on Monday, bonds from South Africa were firm, and two-way activity was seen for some names from Turkey, the trader said.

The Turkish lira was “firmer, but still underperforming the wider EM foreign exchange move as question marks still remain on what the next headline will be, and the all-important Fitch rating review in first-quarter 2017,” he said.

ICBC sells bonds

In recent deal news, Industrial and Commercial Bank of China Ltd. (ICBC) priced $500 million floating-rate notes due Nov. 29, 2019 at par to yield Libor plus 875 basis points, according to a company announcement.

The deal was Regulation S-registered.

Other details were not immediately available on Monday.

The bank is based in Beijing.

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