EM spreads mixed, trading somewhat active; bonds from Turkey, Dubai, Lat-Am narrow

By Christine Van Dusen

Atlanta, July 9 - Emerging markets bonds put in a busy day on Tuesday amid mixed spreads, demand for Ukrainian corporates and better bids for bonds from Dubai.

The Markit iTraxx SovX CEEME ex-EU index opened on Tuesday at Treasuries plus 239 basis points, unchanged from Monday. The Markit iTraxx Crossover index spread - seen Monday at 446 bps - tightened to 429 bps on Tuesday.

"Pretty active with good interest," a London-based trader said. "Yesterday had a real summer feel to it, and the arrival of Ramadan this week may lead to a little less in the way of liquidity going forward."

Sellers outpaced buyers for most of the session.

"The euro zone has approved a €6.8 billion aid payment to Greece after the Troika concluded their economic reforms were on track," a London-based analyst said. "Despite the recent moves in US Treasuries, [emerging markets] feels supported."

Bonds from Turkey were 1 bp to 2 bps tighter on Tuesday morning.

"Bank paper is somewhat weaker," she said. "Russian corporates are seeing bigger moves."

For example, Russia's Nord Gold NV saw its bonds tighten by 30 bps, and Russia-based VimpelCom Holdings BV's notes moved in by 16 bps.

From Ukraine, sovereign bonds have been mostly unchanged so far this week, said Svitlana Rusakova of Dragon Capital.

"Just a few prices on the screens," she said. "Some supply in quasi-sovereign names."

Demand was noted for MHP SA's 2015s and First Ukrainian International Bank's 2014s.

"The bond is already inside the sovereign curve by a few basis points," she said of the latter issue.

Lat-Am tightens

Higher-rated corporate bonds from Latin America finished Tuesday's session tighter, a New York-based trader said.

Venezuela and Petroleos de Venezuela SA (PDVSA) experienced a sell-off during the afternoon, with the sovereign's 2027s moving from 84 in the morning to 81¾ in the afternoon. PDVSA's 2017s ticked down from 90¼ to 913/4, he said.

"Overall, account activity was balanced," he said. "Volumes were lighter than the last few weeks."

Dubai notes catch a bid

Sovereign and corporate bonds from Dubai were better bid on Tuesday, a trader said.

"Despite some glaring opportunities yesterday, Dubai buyers have decided today is the day to bid up the market," he said.

So Dubai Electricity and Water Authority's 2020s were trading 5 bps tighter at 113½ bid, 114 offered. And Dubai Holding's 2014s and 2017s were both bid above par, about 45 bps tighter on the week.

"Majid al-Futtaim Holdings' 2019s are now at 102 bid, 102½ offered, 6 bps tighter," he said. "Emirates NBD's perpetuals are back to 93 bid, 13 bps tighter."

DPWorld's 2017s were lifted late in Monday's session and the 2037s got some nibbles, he said.

"Five bps tighter on both today," he said. "Emirates airline's paper is supported, with the 2016s now 15 bps tighter on the day."

Dubai Islamic Bank's bonds also traded well on Tuesday, with the perpetuals printing at 98 on the bid side after pricing at par. That's about 40 bps tighter on the week, he said.

"The front end of the Dubai curve is 15 bps tighter, with good bids on the 2014s and 2015s," he said.

Qatar bonds mixed

Meanwhile, bonds from Qatar were mixed.

"Certainly not the interest that I've seen on Dubai," the London trader said. "Qatar's 2023 is definitely going to win my bond of the week award, barring a miracle performance from some other bond in my world. The lower dollar-priced, yield-hungry, sovereign sukuk fixed-rate buyers are hoovering this up in some style, and dealers have struggled to replace paper."

The 2023s are now 25 bps tighter on the week.

"For someone like myself, who first looks at spreads, this looks very rich, but I simply can't fight it," he said.

Some bonds on the long end of Qatar's curve were a couple of basis points tighter on Tuesday.

"Interesting that the 2040s have lagged the 2042s over the month by almost 10 bps," he said.

Middle East in focus

In other trading on Tuesday, Qatar-based Ooredoo QSC, formerly known as Qtel International, saw demand.

"Abu Dhabi Islamic Bank senior paper is well supported and tricky locating," the London trader said. "Dolphin Energy is better bid, and there are still sellers of Sharjah Islamic Bank around."

Buyers appeared for International Petroleum Investment Co. (IPIC)'s euro notes due in 2018, 2021 and 2023, he said.

And Emaar Properties' 2019s were 40 bps tighter on the week.

"Further stability in the rates market saw some more buyers emerge, and they are testing the shorts," a trader said.

He pointed to Jebel Ali Free Zone (Jafza), which traded Monday with a 107 handle and on Tuesday closed at 109¼ bid, 109¾ offered.

"Bahrain bounced back nicely today, with the 2022s up a point and the 2020s almost 15 bps tighter," he said.

Nigeria notes active

The recent two-tranche issue of $1 billion notes due 2018 and 2022 from Nigeria saw some action in trading on Tuesday.

The Rule 144A and Regulation S deal included $500 million 5 1/8% notes due 2018 that priced at 98.917 to yield 5 3/8%. The notes were seen Tuesday at 98.62 bid, 99.37 offered.

The second tranche of $500 million 6 3/8% notes due 2023 came to the market at 98.193 to yield 6 1/8%. Those notes were spotted Tuesday at 98½ bid, 99½ offered.

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