Emerging market debt up on stability in global markets; Russia's IIB sells $100 million three-year notes

By Reshmi Basu and Paul A. Harris

New York, July 26 - Emerging market debt continued to ride higher Wednesday, propelled by a calmer global market backdrop.

In the primary market, Russia's International Industrial Bank priced $100 million of three-year notes at par to yield 9½% via Barclays Capital and VTB.

Meanwhile emerging market debt spreads continue to tighten on the back of ongoing stability in global financial markets. At session's end, the JP Morgan EMBI Global Index was narrower by 2 more basis points at 198 basis points versus U.S. Treasuries.

During the session, the long-end of the Brazilian curve popped higher.

The bellwether bond due 2040 added 0.65 to 128.05 bid, 128.20 offered. Other winners included the country's bonds due 2027 and 2030, which each gained 1 point.

Also in Latin America, the Colombian bond due 2033 moved up 1 point to 130.25 bid, 131 offered. And the Venezuelan bond due 2027 surged 1.50 to 123.45 bid, 124.10 offered.

Meanwhile Indonesian bonds got a boost from an upgrade by Standard & Poor's.

The ratings agency lifted the country's s long-term foreign currency rating by one notch to BB- from B+, citing positive trends in Indonesia's fiscal position. Nonetheless, the agency cautioned that the government may have to spend close to $10 billion in order to clean up the books of state-owned banks.

During the session, the Indonesian bond due 2016 rose 1 point to 103.25 bid, 104 offered while its bond due 2035 added 1.62 to 112 bid, 112.62 offered.

Elsewhere, the Philippines saw its bonds trade up in the secondary, including Wednesday's reopened bonds due 2016 and 2031 via Citigroup, Deutsche Bank and JP Morgan.

On Tuesday, the country retapped its 8% bonds due 2016 to add $300 million. The issue priced at 103.125 to yield 7.531% or 246.4 basis points over Treasuries.

Meanwhile it retapped its 7¾% bonds due 2031 to add $450 million. Those bonds priced at 99.25 to yield 7.819 % or 262.4 basis points over Treasuries.

In trading, the 2016 bond moved up 1 point to 104.37 bid, 104.75 offered while the 2031 bond gained 0.50 to 100.25 bid, 100.75 offered.

Argentina up

In other developments, Argentina saw strong performances in both local-denominated and U.S. dollar-denominated fixed-income instruments, most notably in the long end of the dollar curve and the middle of the peso curve.

On Wednesday, the country placed $500 million of Bonars due 2011 to yield 8.34%. The Treasury saw strong demand from external accounts for the issue, attracting $2.5 billion in bids. That successful auction gave support to the external market.

During the session, the Argentinean discount bond due 2033 added 1.25 to 94.20 bid, 94.50 offered.

All in all, the overall session was "quite positive," according to a trader, who added that "the market was well supported on a benign backdrop."

© 2015 Prospect News.
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