EM steady in quiet Friday trading; window is open but calendar is thin, says trader

By Paul A. Harris

Portland, Ore., Jan. 13 – Emerging markets debt was steady in quiet Friday trading, a London-based bond trader said.

Conspicuous recent deals were trading above new issue prices.

New euro-denominated sovereign bonds from Israel were both tighter on Friday, the trader said.

The Israel 1˝% notes due Jan. 18, 2027 were 5 basis points better on Friday, at mid-swaps plus 82 bps bid. The €1.5 billion tranche priced at mid-swaps plus 87 bps.

Israel’s new 2 3/8% notes due Jan. 18, 2037 were 4 to 5 bps better, at mid-swaps plus 121 bps bid, on Friday. The €750 million tranche priced at mid-swaps plus 125 bps.

Dollar-denominated quasi-sovereign corporate paper issued earlier in the week by Brazil’s Petroleo Brasileiro SA (Petrobras) was also trading above new issue price on Friday, a hedge fund manager said.

The Petrobras Global Finance BV 6 1/8% senior notes due Jan. 17, 2022, and the 7 3/8% senior notes Jan. 17, 2027 were both 101 7/8 bid, 102 1/8 offered on Friday.

Both issues came at par in tranches sized at $2 billion.

Window is open

The week ahead – holiday abbreviated week in the United States, where markets will be closed on Monday in commemoration of Dr. Martin Luther King Jr. – should provide an open window for issuers in the emerging markets space, the London-based trader said.

Aside from the presidential inauguration in the United States, there are central bank pronouncements expected from the Fed’s Federal Open Market Committee, the Bank of England and the Bank of Japan.

None of that is expected to significantly impede issuers, the source added.

However right now the forward calendar is on the thin side.

Egypt is expected to start a roadshow on Tuesday for $2 billion to $2.5 billion of eurobonds, a deal likely to come to the market in February.

As reported, Egypt was previously expected to issue notes before the end of 2016, but a deal never materialized.

Bahrain’s Gulf International Bank BSC is expected to market a benchmark-sized and dollar-denominated offer.

Citigroup, HSBC, JPMorgan, Mizuho Securities, National Bank of Abu Dhabi and Standard Chartered are the bookrunners.

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