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Morning Commentary: Emerging market credit quiet ahead of Fed news; Asia primary active
By Rebecca Melvin
New York, Dec. 13 – Emerging market credit was “relatively quiet” early Wednesday as investors awaited the U.S. Federal Reserve’s release of new policy and economic expectations following its last policy-setting meeting of the year.
“In CEEMEA, the secondary market is relatively quiet and the primary world is ready for Christmas,” a London-based market source said.
CEEMEA refers to the region of Central & Eastern Europe, the Middle East and Africa.
The Fed is expected to announce its third interest rate increase this year, but that “increase has been fully priced in for quite an extended period of time,” the source said. The questions that remain are regarding whether two or three hikes are in the cards for next year, as well as projections on inflation, economic growth and unemployment. The central bank statement and forecasts will be released at 2 p.m. ET.
Emerging market credit, which have put in strong returns this year, are less vulnerable to central bank policies of the developed world than before as their economies have continued to grow, but higher U.S. rates make emerging market stocks, bonds and currencies less attractive to investors in general.
There were no new deals announced or priced in CEEMEA or Latin America but a couple of deals priced out of the Asia region.
China’s CIFI Holdings (Group) Co. Ltd., a Shanghai-based property development business, priced $300 million of senior perpetual capital securities at par with a 5 3/8% initial distribution rate, and Beijing-based lender Industrial and Commercial Bank of China Ltd. issued $900 million of floating-rate medium-term notes, including $600 million of notes due 2020 and $300 million of notes due 2022.
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